Semiconductor manufacturers were hit with a harsh dose of reality this week as the threat of export restrictions sent share prices plummeting. Tech stocks in general have experienced a stellar year so far but much of that momentum is beginning to fade in light of a widespread rotation out of the technology sector. Many investors are in the process of rebalancing their portfolios ahead of expected interest rate cuts later in the year, shifting focus back into stocks most likely to benefit from such a transition.
Fundamentals took a significant turn for the worse on Wednesday however after rumours started to emerge about potential export curbs to China. Former president Donald Trump also affected markets following comments relating to Taiwan’s defence status. Nvidia (NVDA), Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing Company (TSM) and ASML all suffered heavy losses on Wednesday. The prospect of greater protectionism in the technology sector, coupled with a more general repatriation of manufacturing back to US soil will no doubt weigh heavily on investor sentiment moving forward.
The Nasdaq Composite fell heavily over the last couple of sessions, as did the S&P 500. The Dow Jones reached yet another record high on Wednesday, only to completely retrace the move on Thursday, closing 1.3% lower.
All the commotion resulted in a certain amount of volatility in currencies over the last two days, with the Dollar initially losing ground on Wednesday, only to regain it the following session. Japanese authorities continued to mount a defence of their currency this week, managing to push USDJPY back down to 156 Yen before pulling back yesterday.
