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London Stocks Starts Second Half on Negative Note

UK stocks fell on Friday. It was heading for a fourth weekly decline in five. Concerns about the central bank’s aggressive actions led to a sharp economic decline. The FTSE 100 fell 0.1%. FTSE 250 was down 0.3%, Declining since the second half of 2022 after a rough first half. Amid concerns, a rapid rate hike to curb high inflation would trigger a global recession.

Inflation will remain the main driver of markets in the second half, and overall market sentiment will depend heavily on inflation numbers. The only thing helping to ease inflation fears is low energy and commodity prices. The Bank of England has increased interest rates several times since December. The next scheduled announcement will be on August 4. Some market players expect a bigger increase of 50 basis points. In May, inflation reached a 40-year high of 9.1%. This is the fastest rate among the seven rich countries. Britain has proposed a reduction in value-added tax; to help families with living expenses.

Healthcare, industrial metals, and mining stocks were Friday’s biggest drags on the FTSE 100. Shell rose 1.1%; After the early trade fell, with news that the oil major has suspended plans to sell onshore oil assets in Nigeria; Also, after Russia moved to create a new firm responsible for the Sakhalin-2 oil and gas project. Abrdn dropped 1.8%; After Citigroup downgraded the fund managers’ shares from neutral” to sell.

Taiwan Encourages Investors to Remain Calm

According to the deputy finance minister, Taiwan’s economic fundamentals are good, and investors should be calm. Taiwan’s benchmark stock index closed up 3.3%. This is the worst-performing market in Asia on Friday. This year it decreased by 21%. TSMC shares fell 4.7%. Taiwan’s economic fundamentals are good, especially trading numbers and earnings figures for listed firms. According to him, the drop in the stock market today is a bit of an overreaction and panic.

The stock market should not fall like this in today’s economic climate. Taiwanese stocks fell deeper today than the US and South Korea. This is a psychological panic. According to his assessment, the stock market should return to its fundamental condition.

Policymakers cut Taiwan’s economic growth outlook to less than 4% this year after an earlier forecast to grow by more than 4%. The war has hit the trade-dependent island in Ukraine, global inflation, supply chain disruptions, and reduced demand for technology-related products.

Micron Technology’s significantly weaker-than-expected business outlook raised concerns. After nearly two years of strong demand, the industry has slipped into a downward cycle. That fueled a sell-off in some Taiwanese tech stocks on Friday. MediaTek ended up 6%.

According to the minister, Taiwan is economically better than other parts of Asia. Although the economic growth rate has slowed slightly, The GDP growth rate will reach 3.91% this year, which is still very good. Statistics Service made the forecast at the end of May, with a forecast of 4.42% growth in February. Preliminary GDP data for the second quarter will be published at the end of July.

Conclusion

Kohl’s lost 17.9% in premarket trading. Micron dropped 4.6% despite better-than-expected quarterly earnings. Stocks in the chip maker had tension due to a lower sales outlook. This was due to the weakening of overall demand. Meta cuts employment plans and prepares for the economic downturn. FedEx fell 2.1% in the premarket.



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