European shares fall after renewed sell-off in Hong Kong tech stocks

Stock Updates

European shares fell on Thursday after a new wave of volatility in the Hong Kong stock exchange and ahead of a major US central bank summit.

The region-wide Stoxx 600 Index and the British FTSE 100 Index are down 0.4 percent, the French Cac 40 Index is down 0.5 percent, and the German Dax is down 0.7 percent. Retailers, travel, leisure and staple groups were among the defaulters.

Asian markets came under more pressure, with Hong Kong’s Hang Seng Index dropping 1.1 percent. Short video platform Kuaishou, a Chinese group listed in Hong Kong, fell 9.2 percent after weaker-than-expected earnings in the second quarter.

The Hang Seng is down 6.7 percent in the year to date, with the technology sub-index down nearly 25 percent. Markets in Hong Kong and mainland China have recently seen successive bouts of turmoil sparked by Beijing’s crackdown on the private sector.

Commodities also fell, with global benchmark Brent crude falling 0.6 percent to $71.81 a barrel, while the US West Texas Intermediate fell 0.8 percent to $67.82 a barrel. Gold was down 0.2 percent at $1,786 an ounce.

Meanwhile, South Korea became the first major Asian economy to raise interest rates since the beginning of the pandemic. The move comes ahead of a virtual meeting of central bankers sponsored by the Federal Reserve in Kansas City. The summit will be led by a speech by Federal Reserve Chairman Jay Powell on Friday.

Investors will be looking for clues about when the Fed will begin removing stimulus measures in an era of crisis as the economy and labor market have remarkably recovered from the coronavirus shock.

“The fact remains that we have monetary policy settings at emergency levels,” said Stephen Bell, chief economist at BMO Global Asset Management. “The fire is almost over, it is not appropriate to continue easing monetary policy.”

Bell said indicators such as signs of rising wage inflation will be important measures for deciding when to begin scaling back the Federal Reserve’s $120 billion per month asset purchase program.

In the US, the S&P 500 futures traded 0.2 percent lower, while the technology-focused Nasdaq 100 futures were flat.

Without Hedging – Markets, Finance and Strong Opinion

Robert Armstrong explains the most important market trends and discusses how the best minds on Wall Street respond to them. Subscribe here to get our newsletter sent straight to your inbox every day of the week

Source link