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German semiconductor manufacturer Infineon was among the sharpest fallers on Friday as European tech stocks slumped.
Matthias Balk/Agence France-Presse/Getty Images
European stocks fell sharply on Friday, as technology stocks tumbled and investors were no longer able to shrug off escalating tensions between the U.S. and China.
The pan-European Stoxx 600 SXXP, -1.98% slipped 2.1% in early trading, with tech stocks falling 4.5%. The German DAX DAX, -1.99% fell 2.2% and the French CAC PX1, -1.95% was 2.1% lower. U.S. stock futures YM00, -0.50% ES00, -0.49% NQ00, -1.11% also pointed lower.
After Intel warned production problems could delay the next generation of its nanometer chips by at least six months, European microchip companies Infineon Technologies IFX, -4.78% and ASML ASML, -6.26% slumped in early trading. Asian markets tumbled overnight as Beijing retaliated against the U.S. after the Trump administration ordered the closure of the Chinese consulate in Houston. China ordered the U.S. to close its own consulate in Chengdu, as the spat between the world’s two largest economies intensified.
Hong Kong’s Hang Seng HSI, -2.20% index fell 2.6%, while China’s Shanghai Composite SHCOMP, -3.86% slumped 3.9%. The negative sentiment, compounded by U.S. tech stocks falling late on Thursday, spilled over into the European open.
“The fear is that this might only be the start of a re-escalation in tensions between the two superpowers,” Spreadex analyst Connor Campbell said, as President Donald Trump seeks to “distract” from the domestic situation in America ahead of the Presidential election.
After Intel warned production problems could delay the next generation of its nanometer chips by at least six months, European microchip companies Infineon Technologies IFX, -4.78% and ASML ASML, -2.13% slumped in early trading., along with the broader European tech sector.
Thursday’s late slump lower on Wall Street was led by Apple and Microsoft, accounting for more than half of the Dow’s DJIA, -1.30% losses, as weak employment data and concerns over another Congressional financial-aid package appeared to spark a selloff in large-cap stocks. Tesla TSLA, -4.97%, Amazon.com AMZN, -3.65%, Netflix NFLX, -2.49% and Google parent Alphabet GOOGL, -3.07% all fell.
There was some good news in Europe, but it was largely ignored by investors, given the broader mood early on Friday.
French business activity beat expectations in July, rebounding more than expected after lockdown measures were lifted, according to the closely-followed purchasing managers index. The German manufacturing sector also avoided a contraction for the first time in 19 months. In further positive signs, U.K. retail sales surged 13.9% in June, beating consensus estimates of a 8.3% rise, with sales now higher than they were precrisis.
Stocks in focus
British Gas owner Centrica CNA, +20.01% soared 22% after announcing a deal to sell its U.S. energy business NRG Energy for $3.6 billion.
Vodafone VOD, -4.36% stock fell 3.4% as the world’s second-largest mobile operator confirmed plans to list its towers business in Frankfurt next year. The company’s revenue fell 1.4% to €10.5 billion ($12.2 billion) in the fiscal first quarter.
