UK and global markets suffered sharp declines on Wednesday as concerns about the health of the global economy weighed on investor sentiment. The FTSE 100, which represents the largest companies on the London Stock Exchange, dropped 0.55% by midday, following steep losses in both Asian and U.S. markets. Germany’s DAX and France’s CAC 40 each slid by over 1%, while Spain’s IBEX dipped 0.51%.
Nvidia, the U.S.-based chip manufacturer, took one of the hardest hits, with its stock plummeting nearly 10% amid dampened optimism about artificial intelligence (AI). Despite the decline, Nvidia’s share price remains double what it was a year ago, fueled by the AI boom sparked by the launch of ChatGPT. However, the company’s latest projections have tempered expectations, with Nvidia forecasting a slowdown in growth for the coming quarters.
In the U.S., the S&P 500 fell more than 2%, while the tech-heavy Nasdaq dropped over 3% on Tuesday, erasing $279 billion from Nvidia’s market capitalization. Other tech giants, including Alphabet, Apple, and Microsoft, also posted significant losses, contributing to the market’s overall decline.
Asian markets reflected the global unease, with Japan’s Nikkei 225 ending the day 4.2% lower, and South Korea’s Kospi falling by more than 3%. Major tech firms in the region, such as Samsung Electronics, TSMC, and Tokyo Electron, saw steep losses as well. Japan’s Nikkei has managed a 12% gain over the last year, but the broader regional performance has been weaker, with markets like Hong Kong and Shanghai facing losses over the same period.
Investors are now focusing on Friday’s U.S. jobs report, hoping it will provide clues about the direction of the world’s largest economy. Julia Lee of FTSE Russell told the BBC that concerns over global growth are driving the markets lower as investors attempt to anticipate the Federal Reserve’s next move on interest rates.
Swetha Ramachandran, a fund manager at Artemis Investment Management, said Nvidia’s recent slide is a result of the company’s lofty expectations finally catching up with reality. The firm has seen incredible growth but signaled in recent reports that a slowdown is likely in the coming months. Additionally, reports that the U.S. Department of Justice has subpoenaed Nvidia as part of an antitrust investigation may have further weighed on the stock.
