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.