Global Economy
European Markets Slip as Chip Decline Meets Rising Middle‑East Tensions
European equity futures point lower on Friday as a wave of sell‑offs in the semiconductor sector spreads from Asia, while fresh hostilities in the Middle East keep risk appetite muted. Traders will also be watching the June inflation print for the euro area, a key input ahead of the ECB’s policy meeting later this week.
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European Index Futures Signal Decline
At the opening of European markets on Friday, futures point to a modest drop: the CAC 40 down about 0.84%, the DAX off 0.45%, the FTSE 100 slipping 0.15%, and the STOXX 600 falling 0.50%.
Semiconductor Weakness Drives Sector Rotation
Investors have shifted out of chip‑related stocks and into more defensive areas such as banking, after strong earnings reports from major U.S. banks. Asian markets are especially vulnerable because their equity exposure to semiconductors is higher than that of Europe.
HSBC analysts note that, after a pronounced rally earlier this year fueled by AI‑related chip demand, concerns are resurfacing over possible overcapacity in the AI semiconductor supply chain.
Upcoming Euro‑Zone Inflation Data
Later this morning, the euro‑area’s final June inflation numbers will be released. The data will be closely watched as a leading indicator before the European Central Bank’s policy meeting scheduled for Thursday.
Middle‑East Conflict Keeps Risk Appetite Low
Oil prices are on track for their biggest weekly gain in three months as geopolitical risk escalates. The United States launched another round of strikes against Iran on Thursday – its sixth consecutive night of attacks – aiming to further degrade Iranian military capabilities. Tehran responded with missile strikes on U.S. military facilities in Kuwait.
Although a cease‑fire was signed on 17 June, both Washington and Tehran have accused each other this month of violating the interim agreement, casting doubt on a diplomatic resolution and weighing on market sentiment.
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