Global stocks experienced a downturn, with the FTSE 100 dropping by 0.18% to 10,478.34, marking its third decline in four days. This broader market sentiment was largely influenced by investor anxiety over the Federal Reserve potentially raising interest rates, despite the probability of a July hike decreasing from 34.2% to 29.4%. Fed Chair Kevin Warsh refrained from giving clear guidance on future rate paths, stating he would not make a judgment yet, which left markets awaiting further data, especially this week's US jobs report.
Adding to the pressure were stalled diplomatic efforts between the US and Iran, mediated in Doha. A fresh deadlock revived fears of renewed volatility over control of the Strait of Hormuz, impacting oil prices, with Brent crude slipping by 2.3% to $71.30 a barrel. This geopolitical tension, coupled with the uncertainty surrounding Fed policy, contributed to a risk-off mood across markets, leading to broad-based selling.
The tech sector, particularly semiconductor and hardware stocks, bore the brunt of the selloff. The Nasdaq Composite dropped by 0.66% to 26,040.03. Major chipmakers like Micron and Sandisk plunged over 10%, with Nvidia slipping 1% and Broadcom falling 2%. Storage and memory stocks also saw significant retreats, with SanDisk down 7.8% and Micron and Seagate both down over 6%. However, Meta Platforms surged nearly 9% after announcing plans to sell excess AI computing power through a new cloud offering, a move that significantly limited the broader S&P 500's decline to 0.22%.
In London, defensive stocks like oil giants BP and Shell were weaker, while Primark owner AB Foods was the biggest blue-chip faller due to warnings of large sugar losses and mixed retail sales. Conversely, defense sector companies like Babcock and BAE Systems saw gains following the British government's announcement of a $15 billion increase in defense spending. On the FTSE 250, CMC Markets surged over 40% after raising its full-year guidance for net operating income.
