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Markets: Tech pain reaches Europe; Pound holds steady

There is no escape for European tech stocks on Monday from the sell-off in the sector, although there is respite for sterling.

Monday’s markets look like this:

● Pound finds support over $1.2740
● FTSE 100 and European bourses slip back, led by tech stocks after the sector’s slump on Wall Street
● Asian equities weaken
● Yen and gold in demand as haven assets in demand
● Oil prices continue to rally

The UK’s FTSE 100 is following its European peers lower — down 0.3 per cent at 7,501.57 — with the mood across equities markets set by selling on Wall Street on Friday.

The weak pound has lifted the UK’s blue-chip index since last year’s Brexit vote, making exports more competitive and helping earnings made in foreign currency. The pressure on sterling is easing, at least against the dollar with the pound finding support at around $1.2740. It is up 0.1 per cent at $1.2746. Against the euro, it is 0.2 per cent weaker at £0.8798.

Investors are also focusing on other factors shaping the outlook for UK stocks.

“We suspect the more important driver for UK equities will remain bottom-up corporate profits, where the outlook remains promising,” says Ian Williams at Peel Hunt. “The management of UK PLC was already operating in an environment of elevated uncertainty before the election and should continue to cope as before.”

Equities
The region-wide Euro Stoxx 600 is down 0.3 per cent, with technology stocks caught in the selling. Frankfurt’s Xetra Dax is down 0.4 per cent, while benchmark Paris CAC 40 is 0.5 per cent weaker in early trading on Monday.

Micro Focus was among the biggest fallers in London, down 2.5 per cent. On the Euro Stoxx 600, chipmakers set the pace of the selling. ST Microelectronics fell 5.6 per cent and ASM International fell 4.3 per cent.

The FTSE 100’s slip limits its rebound since polling day in last week’s general election to 0.2 per cent.

Technology stocks are taking a toll on Asian bourses, after the sector led a Wal Street sell-off on Friday, where the Nasdaq Composite lost 1.8 per cent. Hong Kong’s Hang Seng is down 1.2 per cent, with the Shanghai Composite 0.4 per cent weaker. Japan’s Topix is flat.

Currencies
The dollar is generally weaker as investors look toward this week’s rate-setting meeting at the Federal Reserve. The index tracking the world’s reserve currency is down 0.1 per cent at 97.152.

The euro is up 0.2 per cent at $1.1210.

The yen is 0.1 per cent firmer at ¥110.22.

Commodities
Oil prices are continuing to rise after ending last week with momentum. Brent crude, the international benchmark is up 0.4 per cent at $48.36 a barrel while West Texas Intermediate is up 0.4 per cent at $46.01.

Gold is up 0.1 per cent at $1,267.35 an ounce.