Business
Nvidia’s Stock Plunge Highlights Global Market Concerns
Global markets experienced a sharp downturn on Wednesday, with UK shares following suit after significant losses in Asian and US markets. The declines were driven by increasing concerns about the state of the world’s largest economy, as recent data revealed continued sluggishness in US manufacturing activity. Investors are now anxiously awaiting the release of US jobs figures on Friday, which could provide further insight into the economy’s trajectory.
American technology giant Nvidia, known for its dominance in the AI chip market, was particularly hard-hit, with its shares plummeting by nearly 10%. This decline reflects waning optimism about the AI boom, despite Nvidia’s stock still being worth double what it was a year ago.
The FTSE 100, representing the largest companies on the London Stock Exchange, fell by 0.55% by midday, with major European indices also suffering losses. Germany’s DAX dropped by 1.41%, France’s CAC 40 by almost 1%, and Spain’s IBEX by 0.51%.
In the US, market sentiment was further dampened by uncertainty over how the Federal Reserve will respond to economic growth concerns during its upcoming meeting to decide interest rate policy. On Tuesday, the S&P 500 and the tech-heavy Nasdaq both closed significantly lower, with Nvidia losing 9.5% of its value, a drop that erased $279 billion from its market capitalization. Despite this, Nvidia’s shares remain nine times higher than they were in November 2022, when the launch of AI technologies like ChatGPT sparked a surge in demand for its chips.
Other major US tech companies, including Alphabet, Apple, and Microsoft, also saw their shares tumble. The impact of these declines rippled across Asian markets, with Japan’s Nikkei 225 falling by 4.2%, South Korea’s Kospi losing more than 3%, and Hong Kong’s Hang Seng dropping by 1.1%. Leading Asian technology firms such as TSMC, Samsung Electronics, SK Hynix, and Tokyo Electron experienced significant losses as well.
Julia Lee of FTSE Russell noted that growth concerns are heavily influencing market movements, particularly in exporting countries in Asia, which are being hit hard by these global economic worries. Investors are now closely watching next week’s US interest rate decision and Friday’s jobs report for further indications of the US economy’s direction.
Swetha Ramachandran, a fund manager at Artemis Investment Management in London, suggested that Tuesday’s sharp decline in US shares indicates growing investor skepticism about the likelihood of substantial interest rate cuts by the Federal Reserve.
Bitcoin has soared to a new all-time high, briefly surpassing $106,000 (£83,890) on Monday during Asian trading hours. The cryptocurrency’s unprecedented rally marks a 50% surge since Donald Trump’s victory in the U.S. presidential election on November 5, with market sentiment buoyed by the incoming administration’s pro-cryptocurrency stance.
The Trump administration has signaled a friendlier approach to digital currencies compared to its predecessor. Notably, President-elect Trump recently announced plans to explore creating a national Bitcoin reserve, akin to the U.S. strategic oil reserve, to support the cryptocurrency’s strategic adoption.
Peter McGuire of trading platform XM.com attributed the surge to growing “FOMO” (fear of missing out) among investors. “The Bitcoin rally since the election has been parabolic,” McGuire explained. “Many investors believe $120,000 is achievable by the end of the year, and projections for mid-2025 suggest prices could exceed $150,000.”
Adding to the market optimism, Trump has appointed David Sacks, a Silicon Valley entrepreneur and former PayPal executive, as his AI and cryptocurrency czar. Sacks, known for his close ties to Trump advisor and billionaire Elon Musk, is expected to play a significant role in shaping the administration’s blockchain and cryptocurrency policies.
Chinese crypto entrepreneur Justin Sun, known for his headline-grabbing antics, recently made waves after consuming a $6.2 million banana in an art stunt. Not long after, Sun invested $30 million into World Liberty Financial, a cryptocurrency firm with ties to former President Donald Trump.
The investment proved transformative for the struggling company, pushing it past the threshold needed for Trump to begin profiting from the venture. Trump and his family are now positioned to collect around $20 million, with the potential for more.
Sun, currently facing fraud charges in the U.S. over his own crypto operations, did not elaborate on why he backed the untradable token initiative. However, the move has raised concerns among ethics experts, who view it as an example of how Trump’s vast business interests could create avenues for influence.
Richard Painter, former White House ethics lawyer under George W. Bush, noted the heightened risk:
“The conflicts have grown substantially with the scope of his business empire.”
Trump’s spokeswoman, Karoline Leavitt, dismissed concerns, highlighting that Trump had distanced himself from his real estate empire during his presidency and donated his salary:
“Unlike most politicians, President Trump didn’t get into politics for profit – he’s fighting because he loves this country.”
Critics argue that Trump has not adequately addressed the potential for corruption as his business dealings expand ahead of a possible return to the White House.
Constellation Brands announced Tuesday that it will sell its Svedka vodka brand to New Orleans-based Sazerac, as part of a strategic move to optimize its wine and spirits portfolio amid declining performance in the segment.
- The deal is anticipated to close within the coming months, though the financial terms were not disclosed.
- Bill Newlands, Constellation’s CEO, described the transaction as aligning with efforts to reshape the portfolio for growth, adding, “This transaction is another step forward in seeking to ensure that our wine and spirits portfolio is optimized to succeed.”
- Constellation’s wine and spirits business has struggled compared to its thriving beer portfolio, which includes bestsellers Modelo and Corona.
- Shipments for the segment fell by 9.8% year-over-year in Q2.
- Net sales and operating income dropped 12% and 13%, respectively.
- CEO Newlands cited headwinds in the lower-priced wine and spirits category as a persistent challenge during the company’s October earnings call.
- Despite accounting for only 5% of Constellation’s total volumes in 2023, wine and spirits contributed 17% of net sales, with wine taking the lion’s share at 86% compared to 14% from spirits.
- Sazerac will integrate Svedka into its diverse portfolio, which already includes global brands such as:
- Buffalo Trace bourbon
- Fireball Cinnamon Whisky
- Southern Comfort
- Constellation will retain key spirits labels, including:
- High West Whiskey
- Mi Campo Tequila
- Casa Noble Tequila
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