Global markets entered a volatile phase during Thursday's trading session, as technology and semiconductor stocks fell from Asia to the United States following a strong AI-driven rally since the start of the year. US economic indicators meanwhile painted a more resilient picture of the economy, while geopolitical developments in the Middle East pushed energy risks back to the forefront of investor attention.
Chipmaker stocks fell despite strong results from Taiwan's TSMC, the world's largest manufacturer of advanced chips, after it reported quarterly profits that surged 77% — a performance investors deemed insufficient to justify the sector's elevated valuations.
Analysts said AI stocks are entering a more sensitive phase, in which markets are no longer pricing in growth rates alone but demanding exceptional results that surpass already high expectations.
US stocks fluctuate
US equities retreated as the technology sector faced fresh selling pressure. The Nasdaq Composite fell 1%, the S&P 500 declined 0.4%, while the Dow Jones Industrial Average rose 0.2%, supported by healthcare stocks.
The Philadelphia Semiconductor Index dropped approximately 3.8%, with the US-listed TSMC share falling 2.5%, Western Digital and Seagate each declining 7.3%, and Micron sliding 4.8%.
The selloff followed strong gains for chip stocks this year, driven by expectations of expanding global spending on artificial intelligence and related infrastructure.
Corporate earnings provided some support, with UnitedHealth shares jumping 7.8% after the company raised its 2026 earnings outlook, while GE Aerospace fell 4.4% despite improving its financial guidance.
On the economic front, data showed continued strength among US consumers, with retail sales rising 0.2% in June and core sales climbing 0.5%. Weekly jobless claims fell to 208,000, their lowest level since May.
The data points to the continued resilience of the US economy, reinforcing expectations that the Federal Reserve will keep interest rates unchanged at its next meeting.
Modest European decline
European stocks edged lower as investors continued to assess corporate earnings and the fallout from Middle East tensions.
The Stoxx 600 index fell 0.1%, with most sectors moving in a narrow range, while some consumer spending and healthcare stocks held up better.
Shares in Dutch chipmaking equipment firm ASML rose 2% at the open, bucking the broader sector decline.
Results from French advertising group Publicis also boosted sentiment after it reported revenue growth driven by demand for AI-powered marketing services.
In dealmaking, Swiss industrial group ABB fell 1% after announcing a $5.5 billion acquisition of Britain's Rotork, while Rotork shares surged 66.8%.
Uber also announced a takeover bid for Germany's Delivery Hero valued at approximately $14.8 billion.
FTSE defies the trend
The FTSE 100 closed Thursday's session up 0.5% at 10,572.2 points, outperforming weakness in global technology stocks thanks to strength in consumer staples.
The mid-cap FTSE 250 also rose 0.5%.
Beverages stocks led the gains, rising 2.4%, while retail and personal goods shares climbed 1.9% and 2.6% respectively.
Pharmaceutical and biotech stocks rose 1.2%, major banks gained 0.5%, and the oil and gas sector advanced 0.8%.
In contrast, Ocado shares fell 10.4% to a 13-year low amid concerns about the future of its US market partnerships.
The moves come against a backdrop of continued pressure on the UK economy, after data showed limited growth in May alongside persistent fragility in business confidence.
Asia hit by chip selloff
Asian markets fell sharply, led by Japanese equities, as selling in the technology sector intensified.
Japan's Nikkei closed down 2.8% at 66,835 points, while the Topix declined 1.5%.
Technology companies bore the brunt of the pressure, with Japanese chipmaker Kioxia plunging 15%, SoftBank falling 6.3%, and Advantest declining 5.9%.
Despite TSMC's strong results and its decision to raise its annual revenue growth forecast to more than 40%, investors preferred to take profits following the sharp run-up in AI stocks.
South Korea's Kospi index also recorded a steep decline during the session, affected by the wave of selling in semiconductor companies.
Oil market risk premium
Global oil prices rose more than 1% as concerns about supply security intensified following a renewed escalation of military tensions in the Middle East.
Brent crude gained 93 cents, or 1.09%, to $85.88 a barrel, while West Texas Intermediate rose 89 cents, or 1.12%, to $80.49.
The gains came after reports that Iran had asked the Houthis in Yemen to prepare to close the Red Sea corridor in the event of US strikes on Iranian energy facilities.
Data from Kpler shows that approximately 7.4 million barrels per day passed through the Bab el-Mandeb strait in June, equivalent to roughly 7% of global oil production.
Shipping traffic through the Strait of Hormuz also declined after the United States reimposed a naval blockade on Iran, with the number of vessels transiting the strait falling to 7 compared with 13 the previous day.
Analysts said continued disruptions could push oil into the $90–$95 per barrel range, with the potential to reach $100 if risks escalate further.
Currencies, bonds, and metals
The dollar edged higher against major currencies, with the dollar index rising 0.24% to 100.70.
The euro slipped to $1.1444, while sterling fell 0.4% to $1.348.
In bond markets, the yield on the 10-year US Treasury note rose to 4.573%, while the 2-year yield climbed to 4.164%.
Precious metals also retreated, with spot gold falling 1.1% to $4,014.81 per ounce and silver dropping 2.3% to $56.43.
Global markets remain caught between three principal forces: the strength of the US economy, a correction in AI stocks, and energy risks stemming from geopolitical tensions.