Global financial markets remained under pressure during the European morning on Friday as investors continued to adopt a cautious approach following steep declines across Asian equity markets.
A sustained selloff in technology stocks weighed heavily on market sentiment, while traders looked ahead to speeches from several US Federal Reserve policymakers later in the day.
The economic calendar offered little in the way of major data releases during the European session.
Market participants instead focused on the upcoming revision of the June Consumer Sentiment Index from the University of Michigan and remarks from Fed officials for further direction.
Technology stocks drive market weakness
Investor sentiment remained fragile as concerns over rising chip costs and persistent inflation prompted a reassessment of the sustainability of the artificial intelligence-driven rally in technology stocks.
Asian markets recorded sharp losses.
South Korea’s KOSPI fell around 8% on Friday, while Japan’s Nikkei 225 Index was down approximately 4.5%.
The weakness in equities extended to futures markets, with Nasdaq Futures declining more than 1% during the early European session, reflecting a broader risk-off mood among investors.
The US Dollar holds steady after inflation data
The US Dollar Index remained broadly stable just below the 101.50 level after posting modest losses on Thursday.
According to data released by the US Bureau of Economic Analysis (BEA), the Personal Consumption Expenditures (PCE) Price Index increased 4.1% year-on-year in May, following a 3.8% rise recorded in April.
The reading matched market expectations.
Additional US economic data painted a mixed picture.
Durable Goods Orders declined 4.5% month-on-month in May, while Initial Jobless Claims stood at 215,000 for the latest reporting week.
Economic data from Japan showed that the Tokyo Consumer Price Index increased 1.7% year-on-year in June, up from 1.4% recorded in May.
Despite the inflation data, the USD/JPY currency pair traded within a narrow range above the 161.50 level during the European session, suggesting limited immediate market reaction.
Euro and Pound trade in narrow ranges
The euro remained relatively stable against the US dollar.
EUR/USD posted modest gains on Thursday and held above the 1.1350 level during Friday’s European trading.
However, the currency pair struggled to establish a clear directional trend.
The British pound also traded with limited movement.
GBP/USD remained around the 1.3200 mark after advancing roughly 0.2% in the previous session.
The pound continued to receive marginal support as markets assessed political developments in the United Kingdom.
Investors focused on speculation surrounding the country’s next finance minister under a potential administration led by Andy Burnham.
Market attention also remained on softer US inflation data, which reduced expectations for further US interest rate hikes.
The combination of weakness in technology shares, mixed economic data, and political developments in the United Kingdom kept investors cautious as markets searched for fresh catalysts heading into the week
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