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Grim ASML outlook hits chip stocks

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Luxury giant LVMH result disappoints, cites weak China

spending

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Dollar near two-month high on measured rate-cut bets

(Updates throughout; refreshes prices at 0835 GMT)

By Amanda Cooper

LONDON, Oct 16 (Reuters) - Global stocks fell on

Wednesday after gloomy results from European heavyweights LVMH

and tech company ASML dented sentiment,

while the dollar gained as investors banked on a more moderate

decline in U.S. interest rates.

Investors have grown increasingly likely to punish shares

for earnings misses and Wednesday was no exception in Europe.

ASML, whose customers include TSMC and Samsung

, on Tuesday delivered a gloomy sales forecast for

2025, saying the semiconductor market beyond AI has been weaker

for longer than expected. Its shares fell by the most in nearly

30 years in late trading and sank another 5% early on Wednesday.

Meanwhile, shares in LVMH, considered a play on the Chinese

consumer almost more than anything else, tumbled by the most in

a year after reporting weaker than expected third-quarter sales.

With the optimism washing through markets over China's recent

stimulus measures, the results were not what investors wanted to

see, leaving Paris' CAC 40 down 0.6% and the STOXX 600

down 0.3%.

A Bloomberg News report overnight that U.S. officials have

been considering implementing a cap on export licenses for AI

chips to specific countries added to pressure on the chip

sector. It left indices in Japan, Taiwan and

South Korea - all home to major chip firms - down 1.7%,

1.2% and 0.6% respectively. Nvidia ( NVDA ) shares were up

around 0.5% in the premarket, having slid over 5% after hours.

S&P 500 and Nasdaq futures were flat, pointing

to a more stable open on Wall Street later, after Tuesday's

declines in the major indices .

Pepperstone market strategist Michael Brown said dips could

prove to be good buying opportunities.

"Providing that banks prove a reliable barometer for

earnings season more broadly, solid earnings growth, coupled

with resilient economic growth, should continue to power the

market higher. This is particularly the case with the forceful

Fed put providing additional confidence allowing participants to

remain further out the risk curve," he said.

With stocks within a whisker of record highs and valuations

looking pricey, analysts said there was plenty of scope for

volatility, not least because of the political backdrop.

Matt Simpson, senior market analyst at City Index, said

investors are likely questioning how exposed to risk they really

want to be, given there are risk events and a U.S. election

looming on Nov. 5.

"I expect investors to become increasingly twitchy as we

head towards November 5th, and keen (to) book profits at frothy

levels."

RISING DOLLAR

On the macro side, data earlier on Wednesday showed British

inflation slowed more than expected last month, cementing

expectations for the Bank of England to cut rates at least once,

if not twice, this year.

The pound fell below $1.30 for the first time in

two months, to $1.2993, while UK stocks got a lift, pushing the

FTSE 100 up 0.6% on the day.

The outlook for Federal Reserve monetary policy is at the

heart of the strength in the dollar right now.

Traders are pricing in 46 basis points (bps) of rate cuts

this year. Less than a month ago, after the Fed lowered rates by

half a point, the expectation was for nearly 80 bps in cuts.

As a result, the dollar has surged in recent weeks, with the

U.S. dollar index, which measures the U.S. currency

against six others, at 103.24, near its highest since early

August.

The euro traded around two-month lows and last

fetched $1.08815, ahead of the European Central Bank's policy

meeting on Thursday, at which the central bank is largely

expected to cut rates again.

Oil prices were steady after sliding 5% the day before, as

investors contend with uncertainty around tensions in the Middle

East and what it means for global supply.

Brent crude oil futures were up 0.3% at $74.44 a

barrel, while U.S. futures rose 0.28% to $70.79.