2. China’s mixed inflation picture China’s tech stocks held up reasonably well overnight, but the South Korean KOSPI fell 1.2%, with chipmakers prominent among the losers. Taiwan Semiconductor Manufacturing (NYSE:TSM) also fell 3.1% in Taiwan, while in Europe, chipmakers also led the STOXX Technology index to a 2.2% drop. Those looking for signs of inflation saw fresh evidence of it in China’s latest producer price data, which rose at the fastest annual rate in three and a half years in April. The PPI rose to 6.8% from 4.4% in March, driven largely by expectations of orders for domestic infrastructure investment.
Other U.S. indices were outperforming but were also marked lower: Dow Jones futures were down 0.4% while S&P 500 futures were down 0.7%. The sell-off in technology stocks looks set to continue when Wall Street opens later, with Nasdaq 100 futures already down by more than 1% in the premarket session.
The rise in commodity prices and nascent fears of monetary tightening appear to have been the catalyst for the move that started on Monday, but a variety of other factors have also been at work, from rising regulatory risk to the awareness of sky-high valuations and the consequent rotation into value stocks. 1. Tech sell-off set to continue
3. Crypto joins the sell-off; Musk tries to rally Doge fans Crypto assets joined the sell-off, as the Colonial Pipeline ransomware attack revived fears that regulators may clamp down on the use of such currencies. Separately, China’s census data showed its population grew at the slowest rate in over 100 years in the decade through 2020. The shrinkage of China’s working age population, and the growing number of pensioners it will have to support, may put significant upward pressure on wages in the long term, all other things being equal.
Story continues China’s consumer inflation rate, however, rose by less than expected to 0.9%, despite signs that the global chip shortage is feeding through into higher prices for appliances. (Separately, Japan’s Nissan warned overnight that it would struggle to turn a profit this year due to the chip issue).
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