Daily Market Outlook – Thursday, July 18

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 On Thursday, Asian stocks experienced a decline, driven by a widespread sell-off in the technology sector amid concerns over potential tightening of US restrictions on chip sales to China. The region saw significant losses in Japanese and South Korean stocks, with the Topix index dropping by as much as 1.5%. Tokyo Electron was particularly hard hit for the second consecutive day, experiencing an approximately 11% decline, while Taiwan Semiconductor Manufacturing also dropped by as much as 4.3%. Meanwhile, the performance of Hong Kong and mainland Chinese stocks was mixed, as US futures showed a slight increase.The recent sell-off in the tech sector gained momentum this week following reports that the United States was considering stricter restrictions on chip exports to China. This, combined with comments on Taiwan by Donald Trump, has raised geopolitical concerns and set a negative tone for the European market hours.The technology index for pan-European STOXX 600 is once again in focus after experiencing its largest one-day percentage drop since December 2022 on Wednesday, largely due to ASML dragging it lower. Investors in the chip industry have been cautious due to Washington’s protective stance towards the U.S. semiconductor manufacturing industry, which is seen as strategically important for competing against China.According to Bloomberg news, the U.S. has informed allies that it is contemplating the use of severe trade restrictions if companies continue to provide China with access to advanced semiconductor technology. Additionally, comments from Republican presidential candidate Trump regarding Taiwan have led to a significant decline in chip stocks, resulting in a market value loss of over $500 billion.Chip stocks have been a driving force behind this year’s global share rally, propelling the Nasdaq and S&P 500 to record highs. Some analysts believe that the recent market movements are a result of investors adjusting their positions.Meanwhile, the European Central Bank policy meeting will take center stage later in the day, with expectations for the central bank to maintain interest rates. Traders will closely watch for any comments from officials that may provide insight into future rate cuts. These comments are likely to influence the euro, which reached a four-month high on Wednesday as traders fully priced in a 25 basis-point rate cut by the Federal Reserve in September, following remarks from officials. The yen experienced volatility after reaching its highest level in six weeks on Thursday, with traders still cautious due to suspected interventions.
 Overnight Newswire Updates of Note

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
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CFTC Data As Of 9/7/24

Technical & Trade ViewsSP500 Bullish Above Bearish Below 5550

EURUSD Bullish Above Bearish Below 1.09

GBPUSD Bullish Above Bearish Below 1.29

USDJPY Bullish Above Bearish Below 156

XAUUSD Bullish Above Bearish Below 2345

BTCUSD Bullish Above Bearish below 62000

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