Uncle Banerjee looks ahead to European and global markets
Europe’s semiconductor and luxury goods stocks will be at the forefront of investors’ minds on Wednesday after lackluster earnings from the region’s biggest tech company ASML and luxury goods flagship LVMH pushed share prices down, but that’s not at all. It’s for the wrong reasons.
Chip stocks around the world fell after the Dutch company said ASML expects sales to be weak in 2025, with AI-related chips doing well but the rest of the semiconductor market not. The company said that many chipmaker customers are becoming cautious.
ASML is the world’s largest chip manufacturing equipment maker, and its customers include AI chip maker TSMC, logic chip makers Intel and Samsung, and memory chip specialists Micron and SK Hynix.
It’s no wonder, then, that the weak outlook triggered a series of declines in semiconductor stocks in Europe, the US, and Asia. The European tech stock index fell 6.5% on Tuesday, its biggest single-day decline in four years.
Stock prices are likely to stabilize on Wednesday, but sentiment is expected to be weak during the day.
Investors will also be watching how luxury stocks react after LVMH reported its first quarterly sales decline since the pandemic due to weak consumer demand in China.
That added to a wall of investor anxiety about the sector, which is highly dependent on China, and took away momentum from recent gains in luxury goods stocks on news of China’s stimulus package.
LVMH Chief Financial Officer Jean-Jacques Guiony said consumer confidence in China has fallen to its lowest level ever during the coronavirus pandemic.
There was already growing skepticism among investors about whether China would deliver extensive details and strong fiscal stimulus to revive its sputtering economy.
China is also a theme for ASML, which generated 47% of its total revenue from China in the latest quarter, but that contribution is expected to drop to 20% in 2025.
Investors are keeping an eye on Thursday’s Beijing press conference (yes, another one), this time to discuss promoting the “stable and healthy” development of the real estate sector.
On the macro front, the UK’s September inflation data is due to be released later in the day and will help chart the Bank of England’s likely path at next month’s policy meeting, as markets lean toward a rate cut. .
Data on Tuesday showed British salaries grew at the slowest pace in more than two years and job openings fell again in the three months to August, suggesting central bank interest rate cuts are on track. Ta.
Key developments that may affect the market on Wednesday:
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Economic events: UK September CPI and PPI
(Written by Ankur Banerjee in Singapore; Edited by Edmund Klamann)
