Chipmakers put pressure on equity indexes globally, oil edges down
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NEW YORK/LONDON, July 16 : Tech-heavy equity indexes around the world fell on Thursday as investors offloaded chip stocks, while oil futures gave up earlier gains even as the U.S. and Iran stepped up attacks.
Chip stocks fell from Asia to the U.S., as higher-than-expected 77 per cent earnings growth from Taiwanese chip manufacturing giant TSMC was not enough to impress investors who have heavily leaned into technology stocks related to artificial intelligence.
“That tells you the AI trade isn’t being priced on growth anymore. It’s being priced on perfection. Any earnings report that’s merely great, instead of flawless, gets sold,” said Gene Goldman, chief investment officer at Cetera in El Segundo, California.
U.S. retail sales increased marginally in June as lower gasoline prices weighed on receipts at service stations, though consumers continued to support underlying spending. The sales increase of 0.2 per cent was in line with the mean economist expectation.
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And after two days of U.S. equity gains on soft inflation data, Goldman said Thursday’s trade represents “the market catching its breath, not changing its mind.”
On Wall Street at 12:13 p.m. ET (1613 GMT), the Dow Jones Industrial Average rose 9.02 points to 52,802.29, the S&P 500 fell 27.64 points, or 0.36 per cent, to 7,544.76 and the Nasdaq Composite fell 250.25 points, or 0.95 per cent, to 26,018.97.
The Philadelphia semiconductor index sank more than 4 per cent, putting it on track for a second straight day of losses.
MSCI’s gauge of stocks across the globe rose 3.23 points, or 0.3 per cent, to 1,124.91 and the pan-European STOXX 600 index edged down 0.01 per cent.
Earlier, South Korea’s volatile KOSPI index fell more than 6 per cent, while Japan’s Nikkei closed nearly 3 per cent lower.
IRAN, US TRADE MORE ATTACKS
Iran and the United States exchanged fire on Thursday, intensifying attacks that have persisted since the weekend and all but torn up the truce that paused fighting last month. While the two countries wrestle for control of the Strait of Hormuz, Iran signalled that it could prod Houthi allies in Yemen to close the Bab al-Mandeb Strait at the mouth of the Red Sea, another key oil route.
Oil prices gave up earlier gains, with U.S. crude falling 0.3 per cent to $79.37 a barrel and Brent trading at $84.91 per barrel, down 0.1 per cent on the day.
U.S. Treasury yields rose after economic figures on consumer health and the labor market did little to alter investor expectations for the path of interest rates from the Federal Reserve.
The yield on benchmark U.S. 10-year notes rose 2.84 basis points to 4.573 per cent from 4.545 per cent late on Wednesday, while the 30-year bond yield rose 2.11 basis points to 5.1041 per cent.
The 2-year note yield, which typically moves in step with Fed interest rate expectations, rose 3.6 basis points to 4.164 per cent.
The dollar edged higher against major peers though was still near a one-month low, reflecting expectations that the U.S. economy will remain resilient and that the Fed will hold rates steady this month.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.24 per cent to 100.70, with the euro down 0.17 per cent at $1.1444.
Against the Japanese yen, the dollar strengthened 0.15 per cent to 162.42.
Sterling weakened 0.4 per cent to $1.348, slipping from the two-month high it reached on Wednesday following reports that soon-to-be British Prime Minister Andy Burnham will likely name fiscal conservative Shabana Mahmood as his new chancellor of the exchequer.
Precious metals fell. Spot gold dropped 1.1 per cent to $4,014.81 an ounce and spot silver fell 2.3 per cent to $56.43 an ounce.
Source: Reuters
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