China semiconductor threat sparked a $100 billion chip rout – Bloomberg

While trying to rationalize the Wall Street’s sea of red, Bloomberg blamed China’s threat to the semiconductor industry during the early Friday morning in Asia.

Read: Wall Street Close: Tech rout takes S&P and Dow into a tailspin

Key quotes

Stocks sellers didn’t show much discretion Thursday as the major indexes tumbled. But the outsize chipmaker rout may have had its origin in a move by China.

The Philadelphia Semiconductor Index fell 5.7% Thursday, its worst session since mid-June, following news that China is planning a sweeping set of new government policies to develop its domestic semiconductor industry and counter recent Trump administration restrictions. The decline shaved off about $100 billion in value for the gauge.

Major chipmakers posted one of their worst days in months. Shares of Nvidia Corp. tumbled 9.3%, the most since March 16. Broadcom Inc. fell 6.1%, Qualcomm Inc. dropped 5.5% and Intel Corp. declined 3.6%.

Semiconductors are key to Beijing’s technology objectives. So the government is preparing broad support to develop so-called third-generation semiconductors for the five years through 2025, Bloomberg News reported. The move comes as the Trump administration threatens to cut off China’s supplies from abroad.

Market implications

Considering the pessimism already sneaked in, coupled with the lack of market moves during the initial Asian session and pre-NFP trading lull, the news couldn’t get a major notice. Though, it can weigh on the S&P 500 Futures by dragging it further from the record top as it opens in a few minutes.

Read: AUD/USD: Depressed near one-week low under 0.7300, Aussie Retail Sales, US NFP eyed