Wall Street saw a dip in its top indices as fears of new trade tensions with China weighed down the markets. The rebound in tech shares that had been driving gains was now tumbling, contributing to the losses. The Dow led the major indices lower with a 1.3 percent drop, after hitting record highs for three consecutive days. Market watchers were concerned about the “overbought” state of tech shares, particularly in artificial intelligence stocks.
Speculation about US President Joe Biden’s decision on the 2024 campaign added to the market volatility, with the VIX volatility index rising by about 10 percent. In Europe, major stock markets ended the day mixed, with London benefiting from the previous day’s surge in oil prices. The dollar firmed after losses, as expectations grew that the US Federal Reserve may cut interest rates later in the year.
The European Central Bank (ECB) decided to keep its key interest rates steady on Thursday, waiting for signs of stable consumer price rises before considering further cuts. ECB chief Christine Lagarde emphasized that there was no predetermined rate path and the decision in September would depend on the data.
On Wednesday, tech firms took a hit after reports suggested that Biden might impose strict restrictions on companies supplying China with semiconductor technology. This news, coupled with Trump’s comments on Taiwan’s military defense, contributed to the market anxiety. Overall, the fears of new trade tensions with China drove the market lower, prompting investors to take profits after a period of strong gains.
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