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Stock markets drop as tech rally fades

LONDON (AFP) – Major European and Asian stock markets retreated yesterday following a broadly negative lead from Wall Street, where tech giants led a sell-off on profit-taking.

On the corporate front, British soft drinks manufacturer Britvic grew seven per cent following news that it has rejected a takeover approach worth GBP3.1 billion (USD3.9 billion) from a Danish beverage manufacturer, arguing that it significantly undervalued the maker of Robinsons squash.

With focus on European political uncertainty ahead of a French snap election, data yesterday showed growth of business activity in the eurozone slowed down in June after the manufacturing sector posted its biggest decline in six months.

The HCOB Flash Eurozone purchasing managers’ index published by S&P Global recorded a figure of 50.8, down from 52.2 in May and its lowest level in three months.

A purchasing managers’ index (PMI) reading above 50 indicates growth, while a figure below 50 shows contraction.

In the United Kingdom (UK), the private sector grew at its slowest rate for seven months in June, as goods and services inflation remained stubbornly high and firms put spending decisions on hold until after the general election.

People stand in front of an electronic stock board showing Japan’s Nikkei 225 index in Tokyo. PHOTO: AP

Investors digested also mixed official economic data before Britain’s upcoming voted on July 4, with main opposition Labour tipped to comfortably beat the governing Conservatives.

UK state debt ballooned in May to reach levels not seen for more than 60 years, underscoring the perilous state of the public purse for the next government.

Public sector net debt as a proportion of gross domestic product rose to 99.8 per cent in May. That marked the highest reading since March 1961.

At the same time, retail sales rebounded 2.9 per cent in May from the prior month on strong demand for clothing and furniture.

In the United States (US), worse-than-forecast data provided further signs that the world’s number one economy was softening, but that was not enough to help push the S&P 500 and Nasdaq to record highs closes on Thursday.

The readings showed more people claiming for unemployment benefit than estimated, housing starts falling and a key gauge of business confidence for June well down from May.

The economic figures boosted interest rate cut hopes but Minneapolis Fed boss Neel Kashkari said it could take a year or two to bring inflation back down to the central bank’s two-per-cent target, echoing his colleagues’ warnings that they wanted to take their time before cutting borrowing costs.

The rally in tech shares also lost steam, with shares in market titans including Nvidia, Apple and Microsoft hit by profit-taking.

The 3.5-per-cent drop in Nvidia’s share price meant it relinquished its crown as the world’s most valuable publicly traded firm to Microsoft, which it had overtaken earlier this week.

Asian traders tracked the weak lead, with Tokyo, Hong Kong, Shanghai, Seoul, Wellington, Mumbai and Manila all down. Singapore, Sydney, Bangkok and Jakarta edged up.

“The selloff in US tech overnight is weighing,” said Chamath de Silva of BetaShares Holdings.

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