Bloomberg Daybreak: Europe Edition
Chip Stocks Shed $420 billion, Trump Defends Tariffs & Reeves Budget Hunt
Oct 16, 2024
In this discussion, Lizzie Burden, Bloomberg's UK correspondent, dives into the alarming $420 billion plummet in chip stocks, chiefly due to a drastic slowdown at ASML. She highlights the implications of potential tariffs by the EU if Trump returns to power, stirring political tensions. The talk also sheds light on LVMH's first sales drop since the pandemic, reflecting waning demand from Chinese consumers, and raises concerns over the UK budget amidst escalating political challenges.
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Quick takeaways
- ASML's significant drop in orders signals a troubling trend for the semiconductor industry, exacerbated by geopolitical tensions affecting trade with China.
- UK Chancellor Rachel Reeves faces urgent pressure to raise £40 billion for budget stabilization, amidst concerns over proposed spending cuts and fiscal strategy divisions.
Deep dives
Impact of ASML's Decline on Semiconductor Market
ASML's stock has dramatically declined after reporting orders significantly lower than expected, prompting concerns about the overall health of the semiconductor market. The company's bookings of 2.6 billion euros were less than half of the projected 5.4 billion, which signals a troubling trend for the industry at large. Analysts suggest that geopolitical tensions, particularly related to U.S. restrictions on trade with China, are contributing to this downturn, as ASML relies on Chinese customers for about 30% of its revenue. This struggle is mirrored by other chipmakers, with major companies like Nvidia and TSMC also facing substantial stock declines, indicating a broader industry issue rather than isolated company performance.
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