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European and Asian stocks declined on Monday, with concerns rising over the chipmaking sector’s performance amidst global demand woes.
The Stoxx Europe 600, a regional stock index in Europe, fell 0.6%, mainly due to healthcare and utilities stocks. Additionally, the Cac 40 in Paris dropped 1%, and the Dax in Frankfurt gave up 0.6%, extending its early-morning losses.
In Asia, the Hang Seng index in Hong Kong fell 1.4%, the Kospi in South Korea declined 1%, and markets in Japan were closed for a holiday. Only China’s CSI 300 saw a rise of 0.5%.
This decline in stocks mirrors the tech-led sell-off on Wall Street during the previous trading session, triggered by news of Taiwan’s TSMC, the largest contract chipmaker globally, instructing its main suppliers to delay the delivery of high-end chipmaking equipment.
TSMC, which experienced a 3.2% drop on Monday, has been warning of a deepening slowdown in the chipmaking sector, as the recent AI technology boom struggled to offset wider economic challenges and China’s stagnated recovery.
Nordic Semiconductor, listed on the Oslo stock exchange, saw a 12% decline after cutting its revenue guidance for the third quarter.
Dutch chipmaker ASML’s shares fell 1.1%, STMicroelectronics dropped 1.8%, and BE Semiconductor lost 3.2%. SK Hynix, based in South Korea, declined by 2.8%.
Traders are focused on the upcoming interest rate decisions from three major central banks this week. The Federal Reserve in the US is expected to keep its target range between 5.25% and 5.5% unchanged.
“Further rate hikes would risk sending the economy into a hard-landing scenario,” stated Thomas Simons, senior US economist at Jefferies. “Instead, the Fed can look to a strategy of maintaining current policy rates for a long time.”
Futures contracts tracking the S&P 500 and Nasdaq 100 both edged up 0.1% before the New York market opened.
The Bank of England, scheduled for a rate-setting meeting this week, is predicted to raise its benchmark bank rate by a quarter of a percentage point to 5.5%. Meanwhile, the Bank of Japan is expected to maintain rates at minus 0.1%.
Policymakers face added pressure as headline inflation rates in the US and Europe have recently increased with oil prices reaching their highest level of the year due to further supply cuts from top producers.
Brent crude rose 0.4% to $94.32 per barrel on Monday, remaining near its highest level since November 2022. West Texas Intermediate, the US equivalent, gained 0.6% to $91.31 per barrel.
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