Fears of new trade tensions with China drove Wall Street’s top indices lower on Thursday, led by a 1.3 percent drop in the Dow after a rebound in tech shares tumbled. Market watchers have been concerned about the “overbought” state of tech shares following outsized gains by artificial intelligence stocks in 2024, leading to a 10 percent rise in the “VIX” volatility index. Speculation about US President Joe Biden potentially not running for re-election in 2024 added to market anxiety, with some investors expecting a win by Donald Trump following the June presidential debate.
Meanwhile, European markets ended the day mixed, with London benefiting from a surge in oil prices on Wednesday. The dollar firmed following expectations of a US Federal Reserve interest rate cut this year. The European Central Bank (ECB) decided to keep its key interest rates steady, waiting for stable consumer price rises before reducing borrowing costs again.
Tech firms took a hit on Wednesday after reports that Biden would target companies supplying China with key semiconductor technology. He is reportedly considering imposing strict curbs on companies like Tokyo Electron and ASML if they continue providing Beijing access to their chip tech. Trump’s comments on Taiwan also dampened sentiment, suggesting the island should pay the US for military assistance against China. The market stabilised on Thursday, with uncertainty about future trade tensions contributing to the downward trend on Wall Street.
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