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U.S. Tech Selloff Set to Continue as European and Asian Stocks Tumble

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The technology-heavy Nasdaq is under pressure from U.S. inflation concerns.

(John Smith/Corbis via Getty Images)

The U.S. technology selloff is set to continue on Tuesday, with

Nasdaq

futures down more than 1%, as European and Asian technology stocks also felt the pressure from rising U.S. inflation concerns.

In Asia, Tokyo’s

Nikkei 225

fell 3.08%, while Hong Kong’s

Hang Seng

slipped 2.03%. The

Shanghai Composite

was 0.4% higher. The

FTSE 100

in London dropped 2.1%, as the

CAC 40

in Paris declined 1.9% and Franfkurt’s

DAX

dipped 2.1%. The U.S. premarket looked set for a weak open, with Dow industrials futures pointing down around 130 points after the index fell 34 points to close at 34,742 on Monday.

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Every constituent of the three major stock market indexes in London, Paris, and Frankfurt was in the red in early trading, with the pan-European

Stoxx 600

slipping 2% down from fresh highs reached on Monday. Stocks in Asia—particularly Asian tech stocks—also took cues from Wall Street to move lower. The Nasdaq fell 2.55%, ahead of the

Dow

and

S&P 500

on Monday, as tech stocks fell under pressure.

“Once again it has been concern about inflation that appears to be weighing on broader market sentiment, with commodity prices once again the major culprit, ahead of U.S. CPI numbers that are due out later this week,” said Michael Hewson, an analyst at CMC Markets.

Investors will be closely watching the headline U.S. inflation figure—the Consumer Price Index, or CPI—when it is released on Wednesday. Hewson expects to see “a big rise” in this key measure.

“Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days,” said Russ Mould, an analyst at AJ Bell.  

“The valuations of the tech-based growth companies in the U.S. are harder to justify in an inflationary and rising interest rate environment—where lower risk assets typically offer higher returns—hence the big fall in the Nasdaq yesterday,” Mould added.

European and Asian technology stocks have been battered like their U.S. peers. Shares fell in Dutch semiconductor group

ASML,

German software giant

SAP,

Finnish telecom

Nokia,

British high-tech grocer and robotics logistics specialist

Ocado,

as well as Chinese internet giants

Alibaba,

Tencent

and

Baidu.

There was also particular weakness in companies exposed to commodity prices—especially miners and major oil companies. London-listed miners

Rio Tinto,

Glencore,

Anglo American,

BHP,

Fresnillo,

Antofagasta,

and

Polymetal International

were all lower, alongside European-listed oil groups

BP,

Royal Dutch Shell,

Total,

and

Eni.

Shares in the world’s largest steel producer, Luxembourgish

ArcelorMittal,

were another major faller.

Travel stocks were also a casualty, with airlines

International Airlines Group

—which owns

International Airlines Group

Air France-KLM,

Lufthansa,

easyJet,

Ryanair,

and

Wizz Air

taking a nosedive, alongside hotel giants

InterContinental Hotels Group

and

Accor.

On the U.S. economic front, investors can expect the small-business index for April and job openings for March alongside a raft of speeches from the heads of the Federal Reserves in New York, San Francisco, Atlanta, Philadelphia, and Minneapolis, as well as a speech from Fed governor
Lael Brainard.

Key corporate earnings in the spotlight include

Palantir Technologies,

SoftBank,

Electronic Arts,

and

QuantumScape.

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