European equities slipped on Wednesday as a sharp downturn in technology shares weighed on global markets, mirroring weakness in Asia and following a tough session on Wall Street.
The region-wide STOXX 600 slipped 0.26%, with Germany’s DAX down 0.7%. In London, the FTSE 100 edged 0.11% lower after fresh data showed UK inflation rising to an 18-month high in July.
The pullback echoed declines in Asia earlier in the day. Technology-heavy markets in Taiwan and South Korea were among the hardest hit, while the broader MSCI Asia-Pacific index (ex-Japan) fell 0.74%.
Why Tech Is Under Pressure
There wasn’t a single event sparking the selloff, but analysts pointed to several drivers: a cautious mood ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole later this week, political uncertainty around U.S. tech policy, and broad profit-taking in high-growth sectors.
“This looks like a momentum unwind,” said Michael Brown of Pepperstone. “Investors are de-risking before Powell’s comments on Friday.”
Adding to unease, reports suggest the U.S. Commerce Department is exploring whether the government should take equity stakes in major chipmakers like Intel in exchange for subsidies under the CHIPS Act. Washington recently struck a similar revenue-sharing arrangement with Nvidia over sales of its AI chips to China.
Analysts say such moves highlight a more interventionist stance by the U.S. government toward its most strategic industries. “This is a concerning shift,” warned IG’s Tony Sycamore.
Energy and Geopolitics
Oil prices stabilized after losses earlier in the week, supported by ongoing uncertainty around the war in Ukraine. Brent crude gained 0.8% to $66.32 a barrel, while U.S. crude rose 0.72% to $62.80.
Talks involving U.S. President Donald Trump, Ukrainian President Volodymyr Zelenskiy and European allies ended without breakthroughs, though Trump said Washington would guarantee Ukraine’s security in a potential settlement and floated the idea of U.S. air support—while ruling out sending troops.
Markets remain wary. “The U.S. hasn’t put forward an unconditional security guarantee,” noted Vishnu Varathan of Mizuho. “That uncertainty keeps geopolitical risk elevated.”
Focus Shifts to the Fed
Attention now turns to the Jackson Hole symposium later this week, where Powell is expected to outline the Fed’s policy outlook. Traders have priced in a strong chance of a U.S. rate cut in September, but mixed inflation data—consumer prices versus producer prices—makes the path less clear.
“The data doesn’t point decisively in either direction,” said Mizuho’s Varathan. “The Fed has to weigh inflation risks against a slowing jobs market.”
Currency and Commodities Moves
The dollar firmed slightly ahead of Jackson Hole, nudging the euro down to $1.1639. Sterling was steady around $1.3494 after its brief bump from UK inflation data.
The New Zealand dollar tumbled over 1% to $0.5829 after the country’s central bank cut rates and signaled more easing ahead.
In precious metals, gold gained 0.29% to $3,324.89 an ounce as some investors sought safety from market volatility.
