London stocks are expected to open lower on Thursday as hotter-than-expected US inflation and a sharp sell-off in Asian semiconductor shares weigh on global investor sentiment.
FTSE 100 futures indicate the blue-chip index will fall around 20 points, or 0.2%, to 10,704, reversing some of Wednesday’s 74.53-point gain, which saw the index close 0.7% higher at 10,724.86.
Wall Street ended firmly lower overnight, with the S&P 500 falling 1.1% and the technology-heavy Nasdaq Composite dropping 1.9%, while the Dow Jones Industrial Average slipped 0.1%.
Asian markets suffered heavier losses, particularly among semiconductor manufacturers, as concerns intensified over growing competition from Chinese chipmakers.
Japan’s Nikkei 225 plunged 4.4%, while China’s Shanghai Composite declined 2.4% and Hong Kong’s Hang Seng fell 1.3%. Australia’s S&P/ASX 200 proved more resilient, slipping just 0.1%.
South Korean technology giants were among the hardest hit, with SK Hynix falling 11% and Samsung Electronics dropping 9.6%. In Tokyo, SoftBank Group lost 8.6%, while Murata Manufacturing declined 8.4%.
The sell-off followed reports that Chinese memory chip manufacturer CXMT plans to unveil a new server-memory product by the end of 2026, raising concerns about increasing competition for established semiconductor suppliers.
SPI Asset Management analyst Stephen Innes warned that technological progress from Chinese competitors was challenging investor assumptions about the long-term dominance of existing chipmakers, particularly after strong gains driven by artificial intelligence investment.
The weakness also followed Wednesday’s US inflation report, which showed annual consumer price inflation accelerating to 3.7% in September from 3.4% in August, exceeding market expectations of 3.6%.
The figures increased expectations that the Federal Reserve could raise interest rates at its next meeting on 28 October.
According to Rabobank, market-implied expectations of an October rate increase initially surged towards 50% following the inflation release, before easing to approximately 37% as US Treasury yields retreated.
Federal Reserve officials expressed differing views on the outlook, with Chicago Fed President Austan Goolsbee and Richmond Fed President Tom Barkin highlighting inflation concerns, while Governor Michelle Bowman indicated there was no immediate urgency to increase rates.
In currency markets, sterling recovered to $1.3238 against the dollar, compared with $1.3152 at Wednesday’s London close, although it weakened against the euro to €1.1801.
The euro strengthened to $1.1214, while the dollar slipped to ¥157.93 against the Japanese yen.
Commodity markets were mixed, with Brent crude falling to $104.66 a barrel from $105.67, while gold recovered to $4,141.72 an ounce from $4,089.77.
Attention now turns to the latest UK economic growth figures, with economists expecting GDP to contract by 0.1% in August, potentially adding to concerns about the strength of the domestic economy.
US producer price inflation figures are also due on Thursday, providing further evidence of inflationary pressures following Wednesday’s stronger consumer price reading.
On London’s corporate calendar, investors will be watching trading updates from Antofagasta, Dunelm and Travis Perkins, offering insight into the mining, retail and construction sectors.
The combination of persistent US inflation, uncertainty over interest rates and renewed pressure on technology stocks is expected to keep markets cautious, with UK economic data and further US inflation figures likely to influence trading throughout Thursday’s session.
