Stock markets diverge awaiting Fed signals as tech sell-off deepens

AFP | London

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Stock markets fluctuated yesterday, with many investors sticking to the sidelines while hoping for clues on US interest rate moves.

Trading volumes were light overall, with another pullback in US tech heavyweights spurring caution after their stellar run since April.

Tuesday’s tech sell-off, which extended into Wednesday, was “sparked by concerns about overexcitement and overvaluations in AI stocks”, said Victoria Scholar, head of investment at Interactive Investor.

Wall Street was mostly lower at the open, with the techheavy Nasdaq falling again as shares in AI chip-maker Nvidia fell 1.7 percent ahead of its earnings release next week.

Its rival Advanced Micro Devices and software provider Palantir also saw heavy selling again on Wednesday.

Paris and Frankfurt fell, with European defence stocks adding to losses on signs that a path may be clearing for Ukraine peace talks.

London’s FTSE 100 index rose but the pound fell back from earlier highs after UK inflation rose more than expected in July, dampening hopes that the Bank of England will cut rates again this year.

All eyes are now on the release later Wednesday of the minutes of the Federal Reserve’s latest meeting, which could show if more board governors favour rate cuts soon.

Fed chief Jerome Powell -- who has resisted President Donald Trump’s vociferous calls for rate cuts -- will then give a key speech Friday at the annual central bankers conference in Jackson Hole, Wyoming.

Data last week provided a mixed picture of inflation in the United States, making it uncertain if the Fed will lower rates as many investors expect in September -- which could bolster growth in the world’s biggest economy.

Traders have also been watching the recent diplomatic whirlwind aimed at resolving the war in Ukraine, after President Donald Trump’s high-stakes meeting with Russian counterpart Vladimir Putin in Alaska.

Eyes are now on potential face-to-face talks between Putin and Ukrainian President Volodymyr Zelensky, who has said he is ready for such a meeting.

Oil prices rose, recovering part of the losses from the previous day, as investors monitored progress on Ukraine peace talks.

In Asia, Tokyo closed down 1.5% after official data showed Japanese exports suffered their steepest drop in more than four years last month as US tariffs weighed.