Europe midday: Chipmakers battered as Intel suspends dividend

2nd Aug 2024 11:34

(Sharecast News) - European equities plunged again as part of the global selloff in sharemarkets continued on Friday, after weak US manufacturing data sparked fears of the world's biggest economy going into recession, while chipmakers were hit hard by Intel suspended its dividend and announced plans to slash its workforce.

The pan-regional Stoxx 600 index was down 1.72% at 503.76 with all major bourses lower. Asian shares also plunged overnight, Japan's Nikkei down almost 6% amid worries about growth and the yen.

Eyes are now on US payroll numbers later in the day.

"Markets have opened lower as risk-off sentiment runs riot. Two key bits of data sent jitters through US markets that reverberated around the globe: US weekly unemployment claims rose to an almost one-year high, and manufacturing was weak," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"There are now concerns that the soft-landing scenario priced in for most of the year could be a pipe dream, and the Federal Reserve might have missed its chance to prevent an economic slowdown by not acting on rates earlier in the week. US jobs are out today, and further weakness here will simply exacerbate the current sell-off. Bad news is back to being simply bad news."

Joshua Mahony, chief market analyst at Scope Markets, said Thursday's data "puts a huge amount of emphasis on today's jobs report, with any particular weakness likely to raise calls for a 50-basis point cut by the Fed in September".

In equity markets, chipmakers were battered as Intel slumped 20% in premarket trade after the sector giant suspended its dividend and said it would cut 15% of its workforce in response to retrenched spending on traditional data center semiconductors and a focus on AI chips.

ASM International fell more than 10%, while BE Semiconductor was down 9% and ASML 8% all shedding between 6.6% and 9.2%.

IAG flew higher after the BA and Iberia owner said it would start paying dividends again, posted a rise in first-half profits and abandoned its pursuit of Air Europa.

GSK rose as it said the US Food and Drug Administration has approved its Jemperli treatment in combination with chemotherapy and then use on its own for adult patients with primary advanced or recurrent endometrial cancer.

Dutch chemical maker and distributor IMCD led the gainers after better-than-expected second quarter earnings.

Reporting by Frank Prenesti for Sharecast.com