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BLOOMBERG
European technology shares fell the most in two weeks on worries that central banks will keep driving interest rates higher. ASML Holding NV lost 1.8%, the biggest drag on the Stoxx 600 on Thursday. In the US pre-market, GameStop Corp plunged 18% after firing its chief executive and reporting sales that fell short of estimates.
Technology stocks, which tend to be the most interest-rate sensitive of all equities, are feeling the pinch as investors consider the possibility that the Federal Reserve isn’t finished with its own tightening. Two major central banks this week — the Bank of Canada and the Reserve Bank of Australia — unexpectedly raised rates to bring inflation under control.
“The key thing to remember is that the fight against inflation isn’t over,†Helen Jewell, EMEA deputy CIO of BlackRock Fundamental Equities, said in an interview with Bloomberg Television. “We’re seeing the stickiness in inflation and concerns coming through from a rate hike perspective.â€
Elsewhere in markets, trading was subdued. Treasury yields were steady after the 10-year rate jumped 14 basis points.
US and European stock benchmarks were little changed, while the dollar weakened against peers.
The big question facing markets right now is whether the Fed decides to raise rates next Wednesday or holds after 10 straight increases, Deutsche Bank AG strategists including Jim Reid wrote in a note.
Traders have boosted wagers on Fed rate increases, with swaps close to pricing in a quarter-point hike for the July meeting.
“The market may have looked through inflation perhaps a little more than it should have done,†BlackRock’s Jewell said.
In Europe, the losses in technology were offset by gains in energy producers and defensive trades, like drugmakers. Novartis AG rose 1% after saying its generic-drug unit Sandoz could add $3 billion in sales over the next five years.
Asian shares ticked lower, with the most notable weakness in Hong Kong-listed technology stocks. The yen strengthened after data showing Japan’s economy grew faster than expected in the first quarter.