Global Stocks Fall as U.S. Plans Tighter Import Controls on Chip-Making Technology amid Inflation Data and Currency Market Intervention

Global stocks took a hit on Wednesday as technology shares sank following reports of tighter import controls on companies sharing chip-making technology with China. The news sent shockwaves through the market, with London’s FTSE 100 seeing a slight increase as inflation data remained steady at the Bank of England’s target.

In response to the report, Germany’s DAX and Paris’s CAC 40 both experienced declines, reflecting the broader concern among investors. The future for the S&P 500 and Dow Jones Industrial Average also showed signs of weakness in early trading.

The report indicated that President Joe Biden is considering using the foreign direct product rule to restrict sales of critical chipmaking equipment to China, further exacerbating tensions in the tech sector. This move comes as the U.S. has previously blocked Chinese access to advanced chips and equipment, citing security concerns.

Stocks of companies heavily involved in chip production, such as Tokyo Electron, Disco Corp., and ASML Holding NV, all saw significant drops in their values as investors reacted to the news. Additionally, Taiwan Semiconductor Manufacturing Corp. took a hit, reflecting broader concerns about the impact of the U.S.-China trade tensions on the global supply chain.

The comments made by former President Donald Trump criticizing Taiwan and the U.S.’s relationship with the self-governed island added further uncertainty to the market, particularly in Asia where markets in Taiwan and Hong Kong faced volatility.

Traders are now closely monitoring the outcome of a policy-setting meeting in Beijing where China’s commitment to investing in advanced technologies and self-sufficiency is expected to be endorsed. This ongoing geopolitical tension, combined with concerns about inflation and interest rates, is likely to keep the market on edge in the coming days.

In currency exchanges, the U.S. dollar saw a decline against the Japanese yen, reflecting the broader market sentiment and concerns about the impact of the U.S.-China trade relationship on global markets.

Overall, the news of tighter import controls on chip-making technology with China has sent ripples through the market, highlighting the ongoing challenges and uncertainties facing global investors in the technology sector.