The wave of selling across the tech stocks has reached Europe, after news of Amazon’s lowest profits in seven quarters drew a pause in the sector’s recent run higher. The Euro Stoxx technology index is down 1.5 per cent, against a 0.8 per cent fall for the wider Euro Stoxx 600. Semiconductor maker Infineon is among the biggest fallers. STMicroelectronics is also a leading faller, as is Logitech. National equities indices are weaker. The Xetra Dax 30 is down 0.7 per cent, with London’s FTSE 100 0.4 per cent softer and the CAC 40 down 1 per cent in Paris. South Korea’s tech-heavy Kospi index is down 1.7 per cent, while Japan’s Topix is down 0.5 per cent, with as technology stocks exerting the most pressure. Hong Kong’s Hang Seng is down 0.5 per cent with its information technology sector falling 1 per cent. Richard Hunter, head of research at stock broker Wilson King, says: After a spectacular and ongoing run, the technology sector right around the world was ripe for a small bout of profit-taking — and Amazon provided the excuse. While the drop in its shares is minor compared to the near 40 per cent rally over the year to date, it served as a useful reminder that the exponential growth of the “half a trillion dollars club” — Apple, Alphabet, Amazon and Microsoft each being worth at least that in market cap — will plateau at some point, and that the rest of the sector is not immune from bouts of turbulence. Meanwhile, there is no respite in early European trade for the dollar, as concern about a dovish Federal Reserve and the Trump administration’s difficulties in enacting policy weighing on the currency. The index tracking it is down 0.2 per cent at 93.706, although it is holding above the 14-month low of 93.152 it touched on Thursday. The euro’s strength continues, with the shared currency up 0.2 per cent to $1.17. (How far can this run? Read some thoughts on that here.) Recent trends in core inflation have been weaker than the European Central Bank’s forecasts, adding nuance to expectations about the timing of monetary policy tightening in the eurozone, starting with the reduction, or tapering, of the ECB’s €60bn monthly stimulus spending. “Further softness won’t be enough to stop tapering in 2018, but it would push out expectations for how quickly purchases are wound down and policy rates begin to normalise, taking some of the heat out of the long euro trade,” says Jeremy Lawson, chief economist at Standard Life Investments. The Swiss franc dropped against the euro to SFr1.1350, the Swiss currency’s lowest level since the central bank scrapped its upper limit on the currency in January 2015. The outlook for sustained loose policy in Switzerland as the ECB looks to tighten has set a brisk pace for the franc’s decline this week. Oil edged lower, but Brent crude is holding comfortably above $50 a barrel, and is on track for a weekly rise of over 7 per cent after Saudi Arabia and Russia stood by supply cuts. The international oil marker is at $51.53, up 0.1 per cent on the day. West Texas Intermediate is flat at $49.01.
Source: http://on.ft.com/2u4l5wb
