US stock futures pointed to a weaker Wall Street open, with losses concentrated in large chip stocks after a report that Washington lawmakers are considering new curbs on sales to China.
(Bloomberg) — US stock futures pointed to a weaker Wall Street open, with losses concentrated in large chip stocks after a report that Washington lawmakers are considering new curbs on sales to China.
Contracts on the Nasdaq 100 Index futures pared earlier losses to trade about 0.2% lower, while S&P 500 futures were flat. Semiconductor stocks Nvidia Corp. and Advanced Micro Devices Inc. led losses, falling about 3% in New York.
The Wall Street Journal reported late Tuesday that lawmakers have discussed stopping some sales of artificial intelligence chips to China, which could stoke further tensions between the two countries.
While tougher action from Washington would be a setback for chipmakers such as Nvidia, it’s unlikely to significantly dent appetite for the stocks, which have soared on the back of the AI frenzy, said Timothy Graf, head of EMEA Macro strategy at State Street Bank and Trust Co.
“It’s a minuscule pullback in what’s been a 3-figure-type move for some shares,” he said.
Meanwhile, strategists at BlackRock Inc. said they were bullish on artificial intelligence and buying into the theme. “We implement an overweight to AI as a mega force,” BlackRock’s research arm said in its midyear report published June 28. Their positive stance comes as tech shares have soared, with the Nasdaq set for its best-ever first half of a year.
Read More: Dip Buyers Are Difficult to Find This Time Around: Taking Stock
Among individual movers, UBS Group AG advanced as the company prepared to cut more than half of Credit Suisse Group AG’s workforce. Embattled Swedish landlord SBB AB surged after Goldman Sachs Group Inc. analysts upgraded their recommendation on the stock.
The bonds of Thames Water, Britain’s biggest water supplier, tumbled, with one of its notes falling 35 pence on the pound. The utility is in talks with officials over contingency plans including a temporary nationalization as concerns grow over its more than £13 billion ($16.5 billion) debt pile, according to people familiar with the matter.
Investors are also awaiting news from a central banking forum in Portugal, where the European Central Bank’s Christine Lagarde, Federal Reserve’s Jerome Powell, Bank of Japan’s Kazuo Ueda and Bank of England’s Andrew Bailey are due to speak later in the day.
Treasury yields were broadly lower, yet resilient US economic data has underscored the likelihood that the Fed has further to go in tightening monetary policy. Lagarde and several other policymakers have also stressed the ECB will continue raising interest rates.
“Will they stop or won’t they stop? Will we have a recession and when? All these types of questions going through investors minds causes a lot of vol in thin markets,” said Luke Hickmore, investment director at Abrdn.
The Fed is also expected today to release the results of its annual stress test of the banking industry. Analysts largely expect banks to sail through, even as regulators explore more stringent requirements in the aftermath of a few collapses in the financial industry.
On currency markets, the dollar steadied after two days of losses, rising 0.3% against Group-of-Seven currencies. Bitcoin slipped 1%.
Key events this week:
- US wholesale inventories, goods trade balance, Wednesday
- Fed to unveil results of annual banking industry stress test, Wednesday
- Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey, Wednesday
- Eurozone economic confidence, consumer confidence, Thursday
- US GDP, initial jobless claims, Thursday
- Atlanta Fed President Rafael Bostic speaks, Thursday
- China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
- US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 7:40 a.m. New York time
- Nasdaq 100 futures fell 0.1%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.1% to $1.0949
- The British pound fell 0.5% to $1.2691
- The Japanese yen was little changed at 144.11 per dollar
Cryptocurrencies
- Bitcoin fell 1% to $30,356.6
- Ether fell 1.5% to $1,863.34
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.74%
- Germany’s 10-year yield declined four basis points to 2.32%
- Britain’s 10-year yield declined five basis points to 4.33%
Commodities
- West Texas Intermediate crude fell 0.3% to $67.85 a barrel
- Gold futures fell 0.4% to $1,915.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Charlotte Yang, Ameya Karve and Allegra Catelli.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.