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US futures were weaker on Wednesday on fears that the Biden administration was preparing fresh curbs on the export of computer chips for artificial intelligence to China.
Contracts tracking Wall Street’s benchmark S&P 500 were down 0.2 per cent, while those tracking the Nasdaq 100 lost 0.4 per cent ahead of the New York open.
The moves followed a report in the Wall Street Journal that the US could impose new curbs on some kinds of chips, further raising tensions between the two countries. In pre-market trading Nvidia was down 3.6 per cent and Advanced Micro Devices lost 2.9 per cent.
European equities were higher as stocks caught up with an overnight rally on Wall Street. The pan-European Stoxx 600 added 0.6 per cent while France’s Cac 40 and Germany’s Dax both rose 0.8 per cent, lead by real estate and industrial stocks.
The moves came as investors digested the remarks of European Central Bank vice-president Luis de Guindos, who told the bank’s annual forum in Portugal that eurozone interest rates will almost certainly go up at the next policy meeting in July, but questioned the prospect of a second rise in September.
“I think July is a fait accompli,” Guindos said at the annual ECB conference in Portugal, according to Reuters. “In September, I think that it’s open.”
The central bank last raised its benchmark deposit rate in June, by a quarter point to 3.5 per cent, its highest level in 22 years.
The ECB decision will be informed by the eurozone inflation report on Friday, which is expected to show that price growth slowed to 5.6 per cent in the year to June, down from 6.1 per cent a month earlier, according to economists polled by Reuters.
Traders also prepared to hear from Federal Reserve chair Jay Powell next, who had earlier signalled that the central bank was likely to lift its benchmark federal funds rate twice more before the end of the year.
A day earlier, the S&P 500 closed higher and the Nasdaq Composite registered its biggest daily gain in a month, signalling improved investor confidence after both indices declined for much of last week.
Blue-chip stocks were boosted by fresh manufacturing and consumer confidence data that pointed to continued economic growth in the US economy, even after a year of rising interest rates.
“The bull is on, the pullback lasted a week and a half, now it’s time to rock and roll again,” said Mike Zigmont, head of research and trading at Harvest Volatility.
Australia’s S&P/ASX 200 index rose 1.1 per cent, after official data showed that inflation cooled at a faster rate than expected in May, raising the prospect of a pause in interest rate rises from the Reserve Bank of Australia.
Trading was mixed elsewhere in Asia, with China’s CSI 300 falling 0.1 per cent while Hong Kong’s Hang Seng added 0.1 per cent. Japan’s Topix added 2 per cent, lifted by strong gains in the technology sector.
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