Tech Selloff, Trump Turmoil Shake Global Markets

Markets faced a turbulent week with tech stocks plummeting amid Sino-US trade tensions and uncertainty following an attempted assassination of Donald Trump, causing the VIX index to spike. Asian shares dropped, dragging down Taiwan's TSMC shares, which extended their declines after Trump's comments on Taiwan's defence. The dollar gained safe haven support while the European Central Bank and Fed hinted at potential rate cuts.

Equities

The FTSE 100 closed 0.2% higher, driven by positive corporate updates. Frasers Group led the gains, jumping 9% after reporting a 13.1% rise in annual profit and forecasting strong growth for the next financial year. Schroders saw a near 5% climb following an upgrade from Morgan Stanley to "overweight." Energy and consumer staple stocks also boosted the index. Despite data showing UK wage growth slowed to 5.7%, it remained near double the Bank of England's inflation target, raising market expectations for an interest rate cut next month to 41.2% from 30%.

In contrast, US stocks tumbled, with the Dow Jones Industrial Average falling 1.29%, the S&P 500 dropping 0.78%, and the Nasdaq Composite losing 0.7%. This broad selloff reversed early gains as investors rotated away from high-priced megacap growth stocks amid the ongoing second-quarter earnings season. The Dow halted a series of record closing highs, and the Nasdaq posted its biggest one-day drop since December 2022.

Among individual stocks, Domino's Pizza plummeted 13.6% after missing estimates for quarterly same-store sales. Homebuilder D.R. Horton, however, saw a 10.1% increase in its share price after beating profit estimates and delivering more new homes than expected, though it tightened its annual forecast. The Philadelphia SE Housing index hit a record high as a result.

Warner Bros Discovery rose 2.4% following reports of a potential plan to split its digital streaming and studio businesses from its legacy TV networks. Netflix lost ground in extended trading after releasing its quarterly results. Healthcare stocks in the S&P 500 suffered the largest percentage decline, while energy stocks were the only gainers. The CBOE Market Volatility Index, known as the "fear index," touched its highest level since early May, reflecting elevated anxiety among investors.

Forex & Commodities

The dollar was set to end a two-week losing streak as traders considered the US rates outlook. It stood at 157.72 yen after hitting a six-week high on Thursday. Japan's core consumer prices rose 2.6% in June, raising expectations of a potential rate hike by the Bank of Japan. The dollar index, which measures the greenback against six rivals, climbed 0.14% to 104.29, marking a 0.2% gain for the week.

Gold prices fell 0.8% to $2,425.48 per ounce but remained on track for a fourth consecutive weekly gain. US gold futures dropped 1.2% to $2,427.60. The rise in the dollar and benchmark 10-year Treasury yields exerted pressure on gold. Despite this, gold’s medium-term outlook remains positive due to political uncertainty and anticipated rate cuts. The prospect of the Fed easing monetary policy could push gold prices to a record $3,000 by autumn 2024.

Oil prices remained steady, with Brent futures at $85.11 per barrel and US West Texas Intermediate crude at $82.82 per barrel. Mixed signals about crude demand and expectations of a Fed rate cut influenced the market.

In other currencies, the euro was stable at $1.0888 after a recent drop, while sterling dipped slightly to $1.2938 following slower wage growth data from Britain. The Australian dollar eased to $0.6701, and the New Zealand dollar fell 0.29% to $0.60275.