Key Takeaways
- Nasdaq 100 futures fell 0.6% to a session low on Thursday, driven by a sell-off in AI-related shares and heightened geopolitical uncertainty.
- Bank of England (BoE) Deputy Governor Sarah Breeden signaled a dovish stance, stating that an "Iran war shock" is unlikely to trigger a long-term wage-price spiral due to current economic weakness.
- Thousands of Ukrainians took to the streets in Kyiv and other major cities to protest President Zelenskyy’s dismissal of popular Defense Minister Mykhailo Fedorov.
- Energy markets remain volatile as the breakdown of a tentative U.S.-Iran truce pushed Brent crude toward $85 per barrel, complicating the global inflation outlook.
Tech Sector Under Pressure as Nasdaq 100 Slides
U.S. equity futures extended their decline early Thursday, with the Nasdaq 100 (QQQ) futures dropping 0.6% to hit a session low. The move comes despite record earnings from Taiwan Semiconductor Manufacturing Co. (TSM), as investors weigh the impact of renewed conflict in the Middle East on global supply chains and energy costs.
Market sentiment was further dampened by a broader retreat in Asian markets, where South Korea’s Kospi tumbled 6.6% following a surprise interest rate hike by the Bank of Korea. Heavyweight chipmakers like SK Hynix and Samsung Electronics saw significant losses, reflecting growing "AI sanity check" concerns among global investors.
BoE’s Breeden Downplays Iran War Inflation Risk
In a move that provided a dovish tilt to the British Pound ($GBP), BoE Deputy Governor Sarah Breeden argued that the current energy shock from the Iran conflict is less likely to become "embedded" in the UK economy. Speaking on Thursday, Breeden noted that the UK's sluggish economic activity and rising labor market slack reduce the bargaining power of workers and firms, preventing the kind of inflationary dynamics seen in 2022.
Breeden emphasized that while the central bank remains vigilant, the transmission mechanism for a wage-price spiral is currently weak. She suggested that without the Middle East conflict, UK inflation would likely already be at the 2% target, signaling that the BoE may not need to "lean against" these temporary price spikes with aggressive rate hikes.
Political Turmoil in Ukraine Sparks Mass Protests
Geopolitical instability intensified as thousands of Ukrainians gathered in Kyiv’s Ivan Franko Square to protest the firing of Defense Minister Mykhailo Fedorov. The dismissal, part of a broader cabinet reshuffle by President Volodymyr Zelenskyy, has sparked outrage among the public and military circles, where Fedorov was viewed as a "technological genius" responsible for Ukraine's successful drone program.
The protests, dubbed "cardboard protests" due to the handmade signs carried by demonstrators, have spread to at least 16 other cities, including Lviv and Odesa. The political upheaval comes at a critical juncture in the war, with high-ranking officials like Air Force Deputy Commander Pavlo Yelizarov resigning in solidarity with Fedorov, raising concerns about the stability of Ukraine's military leadership.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.