Chip companies had their worst day since 2020. The Philadelphia chip company index fell as much as 6.8 percent yesterday, while dragging the NASDAQ index by over 2.8 percent. Companies such as "ASML" (-13%) and "AMD" (-10%) fell the most.
Even stronger-than-expected second-quarter results didn't help Dutch ASML as investors focused on the company's future projections, which were slightly less ambitious than investors had expected. The latest news that the Biden administration is considering very serious restrictions on chip companies that give China access to cutting-edge chip technology has brought the most anxiety to the markets. The actions under consideration could allow for controls on products made overseas if they contain at least some US technology, but the companies or countries' governments are expected to limit ties to China themselves. As if that wasn't enough to worry semiconductor companies, yesterday Trump's comments were published that Taiwan "took over 100% of the chip business,” and that Taiwan should pay the U.S. for defense. The former president's current relationship has been compared to an insurance company – the US "insures" Taiwan against a Chinese attack, but gets nothing in return. Taiwan's TSMC fell about 8 percent yesterday.
Investors await the ECB meeting today. This time, no major changes are expected, but hints or confirmation regarding the interest rate cut in September are expected. Previously, the president of the bank, Ch. Lagarde commented that in July at the time of the meeting, the ECB will not yet have enough information on the economic health of the euro area. Quarterly data should be available before September. meeting, which is exactly why investors expect interest rate cuts then. Markets are currently expecting another cut in December.
