Global stock indices were dragged lower again on Friday, pressured by renewed selling in the chip sector and reports that OpenAI might delay its listing plans, dampening market sentiment. Meanwhile, oil prices fell near a four-month low despite difficulties for vessels transiting the Strait of Hormuz.
As of writing, Dow Jones futures were down 0.07%, S&P 500 futures were down 0.50%, and Nasdaq futures had fallen 1.23%. Semiconductor and optical component stocks were broadly weaker in pre-market trading. The Nasdaq index has declined 4.4% over the past four trading sessions.
European stocks also moved lower, with the tech sector down 1.2% and banks down 0.7%, dragging the Stoxx 600 index down 0.4%. London's FTSE 100 fell 0.3%, Germany's DAX dropped 0.7%, and France's CAC 40 declined 0.25%. The Dutch AEX index fell 0.7%, with ASML down 1.4%. Italy's FTSE MIB index was down 0.75%.
The sell-off was more pronounced in Asian markets, led by technology shares, with the MSCI Asia Pacific ex-Japan index falling 3%. South Korean giants Samsung Electronics and SK Hynix faced heavy selling, causing the KOSPI index to plunge as much as 9% at one point, triggering a circuit breaker. Japan's SoftBank Group tumbled over 12%. Japan's Nikkei 225 index fell 4.15%, while China's Shanghai Composite Index dropped 2.3%.
Two Key Factors Behind the Chip Stock Rout
Apple shares fell around 6% on Thursday after the company indicated it could no longer absorb soaring memory and storage chip costs. Concurrently, media reports suggesting OpenAI might postpone its IPO until next year further soured market sentiment.
Mark Ellis, Chief Investment Officer at Nutshell Asset Management, stated, "The market is beginning to worry about the spending power of the 'hyperscalers' and the return on capital from these massive investments."
He noted that while these expenditures have an inflationary effect in the short term, they may decline over the long term due to efficiency gains.
Analysts also pointed out that month-end and quarter-end rebalancing flows could exacerbate volatility in large-cap tech stocks, which have significantly outperformed the market in the second quarter.
Heightened Sensitivity in the Tech Sector
The market has exhibited high volatility this week, with shifting sentiment in tech trading repeatedly unsettling global equities.
A report by The New York Times indicating OpenAI might delay its IPO until 2027 added to the market turbulence.
This news contributed to a sharp decline for SoftBank Group in Japan, with the Nikkei 225 index falling 4.2%.
Francisco Simon, Head of European Strategy at Santander Asset Management, commented, "Tech remains a crowded trade with relatively tight positioning, making the sector more sensitive to negative news or sharp moves in individual stocks."
The market volatility is also prompting investors to seek out sectors with lagging catch-up potential to hedge risks amid stronger economic expectations.
David Manso, Chief Investment Officer at CaixaBank Asset Management, said, "In the current environment, given high concentration and rising uncertainty, the most sensible strategy is to maintain a diversified portfolio. With the earnings season set to begin in the coming weeks, we expect corporate profits to become a new positive catalyst."
Bond Market Finds Support from Falling Oil
In bond markets, continued declines in oil prices, which failed to lift equities, provided support for bonds. U.S. Treasury yields fell across the curve, with the 10-year yield dropping to 4.37%.
European bonds also rose, as traders have now fully priced out expectations for another 25 basis point rate hike from the European Central Bank.
Bill Adams, an analyst at Fifth Third Commercial Bank, stated, "The Fed may be uneasy about inflation at its July meeting, but is likely to keep rates on hold, waiting for data to improve once tariff and geopolitical shocks subside."
Dollar Maintains Strength
In the foreign exchange market, the U.S. dollar remained strong. The dollar index fell 0.3% to 101.2 but stayed near its highest level since May 2025, on track for one of its best monthly performances in nearly a year.
In the U.S., the latest data showed first-quarter economic growth was revised upward, but consumer spending nearly stalled, raising concerns about second-quarter growth momentum.
The Japanese yen failed to find significant support even after U.S. inflation data met expectations and the market scaled back bets on a September rate hike. The yen hovered around 161.59, near its weakest level in 40 years and well above the "160 level" many market participants believe could trigger intervention by Japanese authorities.
Analysts at Deutsche Bank noted this data "weakens the recent market narrative of a hawkish reinforcement." The market has even begun speculating that the Fed may not need to raise rates this year, although officials remain cautious about inflation.
Gold Under Dual Pressure
In commodities, Brent crude oil fell over 3.5% to below $73 per barrel, poised for a significant weekly loss.
Gold prices rebounded above $4,000 but are still on track for a weekly decline of around 5%.
Saxo Bank stated, "Gold is facing dual pressure from a hawkish Fed and a strong dollar. Although technical breakdowns continue to weigh on sentiment, the retreat in energy prices and falling yields may gradually ease tightening pressures, providing some support for gold."
Today, the market will focus on the final reading of the University of Michigan's June Consumer Sentiment Index and public remarks from Federal Reserve official Neel Kashkari.
Notable Stock Movements
Following the announcement of an all-stock deal for ON Semiconductor to acquire Synopsys, the two companies' shares moved in opposite directions. The deal, valued at nearly $7 billion, is the largest acquisition in ON Semiconductor's history; the company estimates it will expand its total addressable market by $30 billion. After the news, ON Semiconductor shares plunged over 15%, while Synopsys shares rose 2.5%.
During Friday's pre-market session, the tech sell-off continued, with several memory chip makers declining. Micron Technology fell over 4.5% in pre-market trading after surging nearly 16% the prior day on a strong earnings report; SanDisk fell by a similar amount, while Seagate Technology PLC and Western Digital shares both dropped around 3.5%.
A report by The New York Times suggesting OpenAI might delay its IPO until 2027 weighed on the semiconductor sector, triggering synchronized selling. ARM Holdings and Marvell Technology each fell about 4%, Advanced Micro Devices dropped 3.5%, Intel tumbled 3%, and Broadcom slipped 1.5%.
Shares of aerospace company Rocket Lab rose 1.5% after the U.S. National Aeronautics and Space Administration (NASA) announced it would provide launch services for two space missions. The missions will study the energy the Sun delivers to Earth and investigate the formation mechanisms of ice clouds on Earth.
After Apple shares posted their worst single-day performance in over a year on Thursday, the stock defied the broader tech sell-off on Friday, edging up 0.5%. The previous day's drop of over 6%, its largest since April 2025, came after the company raised prices on several hardware products due to rising memory chip costs.
International oil prices fell more than 3%, breaking below the $70 per barrel mark again, dragging energy stocks lower. APA Corporation shares fell over 1.5%, Diamondback Energy dropped 1%, while Constellation Energy and Occidental Petroleum each declined 1%.
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