(Bloomberg) — Technology stocks were set to pull back a bit from this week’s slide as a positive earnings update from Taiwan Semiconductor Manufacturing Co. restored the climate towards the sector.

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Nasdaq 100 futures rose 0.6 percent, signaling a partial recovery after concerns over tight U.S. curbs on chip sales in China led to its worst day since 2022. Europe’s Stoxx 600 index posted modest gains, led by media stocks.

TSMC, which makes chips for Apple Inc. and Nvidia Corp., reported earnings that beat analysts’ estimates. The company also raised its forecast for full-year revenue growth, a sign of confidence in the longevity of global AI spending.

In addition to the focus on tech stocks, investors braced for a policy decision from the European Central Bank. While the ECB is expected to keep interest rates steady, markets will be watching President Christine Lagarde for signals that further easing is likely in the autumn after an initial cut in June. Most analysts expect two more quarterly rate cuts this year — in September and December.

The dollar index is trading near a two-month low. Bonds were stable.

In Asian trade earlier, tech losses continued as regional shares fell for a fourth day in five. Tokyo Electron Ltd. faced the brunt of sales for a second day, falling 8.8%. TSMC fell 2.4% ahead of its earnings report.

The latest debacle in the chip sector came after Bloomberg reported that the Biden administration has told allies it is considering serious curbs if companies like Tokyo Electron and ASML continue to give China access to advanced semiconductor technology. The tech underperformance followed a first half that saw megacaps push the market higher, extending their valuations and leaving them with a tougher setup for the rest of 2024.

“Market participants appear to be finding reasons for some relaxation in technology, with talk of further trade restrictions in China casting doubt on the industry’s demand outlook,” said Jun Rong Yeap, market analyst at IG Asia. “As the ‘late trade’ issue is just getting started, relaxation in technology may have more room.”

On Wednesday, US chip giants Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc. led a closely watched semiconductor gauge down nearly 7% — the biggest drop since 2020.

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“I wouldn’t get out of the technology trade right away, but there are some concerns about the valuation,” John Woods, Asia chief investment officer at Lombard Odier, told Bloomberg TV. “I think there are opportunities outside of technology.”

The yen was flat after rising 1.4% against the dollar on Wednesday. The Bank of Japan is unlikely to raise interest rates this month and will instead reduce its bond buying slightly more than expected to avoid any fueling of yen weakness, according to a former central bank executive.

On the US monetary policy front, the Federal Reserve’s Beige Book showed slight economic growth and a decline in inflation. Fed Governor Christopher Waller said the Fed is getting “closer” to cutting interest rates, but it’s not there yet. Initial jobless claims data due later on Thursday will give investors the latest picture of the state of the economy.

West Texas Intermediate, the U.S. oil benchmark, gained again after rising 2.6 percent on Wednesday as investors digested news of wildfires in Canada that threatened 400,000 barrels a day of the country’s oil output.

Key events this week:

• Decision on ECB interest rates, Thursday

• Initial US jobless claims, Philadelphia Fed production, LEI Board Conference, Thursday

• The Fed’s Mary Daly, Lorie Logan and Michelle Bowman speak, Thursday

• The Fed’s John Williams, Raphael Bostic, on Friday speak

Some of the main movements in the markets:

inventories

• The Stoxx Europe 600 was up 0.3% at 8:13 a.m. London time

• S&P 500 futures rose 0.3%

• Nasdaq 100 futures rose 0.6%

• Dow Jones Industrial Average futures rose 0.1%

• MSCI Asia Pacific fell 0.8%

• The MSCI Emerging Markets Index fell 0.4%

currency

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0933

• The Japanese yen was slightly lower at 156.14 per dollar

• The offshore yuan was up 0.1 percent at 7.2643 per dollar

• The British pound was little changed at $1.2998

Cryptocurrencies

• Bitcoin rose 0.5% to $64,871.76

• Ether rose 0.7% to $3,441.69

Bindings

• The 10-year bond yield was little changed at 4.16%

• Germany’s 10-year yield was little changed at 2.42%

• Britain’s 10-year yield fell one basis point to 4.06%

Goods

• Brent crude rose 0.7% to $85.69 a barrel

• Spot gold rose 0.6% to $2,473.46 an ounce

This story was created with help from Bloomberg Automation.

–With help from Richard Henderson.

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