New York (AFP) – Stock markets slid across the board on Tuesday as investors worried about lofty tech valuations on the eve of earnings from AI chip titan Nvidia. Bitcoin also briefly fell below the key $90,000 level for the first time in seven months before rising to around $93,000. Major Wall Street indexes closed lower after a rough day of trading in Europe and a sharp sell-off in Asia, while Nvidia itself gave up 2.8 percent.
“The tech-focused sell-off seen in the US has evidently resulted in global contagion,” said Joshua Mahony, chief market analyst at Scope Markets. In an interview with the BBC released Tuesday, the head of Google’s parent company Alphabet — Sundar Pichai — warned that every company would be impacted if the AI bubble were to burst. Fawad Razaqzada, market analyst with StoneX, pointed out that usually reliable commodities like gold and copper had also been forced downwards.
Shares in US online services provider Cloudflare were off 2.8 percent after the firm said it had been affected by a “latent bug” that disrupted traffic to major websites including social network X and AI chatbot ChatGPT. There was no cheer at the European close either as London, Paris and Frankfurt all shed more than one percent. After this year’s record stocks rally, traders have begun to question whether the billions poured into artificial intelligence will ever lead to big returns.
Investors will be looking for clues on the health of the industry when Nvidia releases its quarterly earnings on Wednesday. “Better news from Nvidia will likely spur some excitement in some of the other AI names that have also seen a pullback,” said Art Hogan of B. Riley Wealth Management. Meanwhile, traders increasingly believe the US Federal Reserve could decide against a further interest rate cut next month. They will be parsing the US September jobs report on Thursday — delayed by the government shutdown — for fresh signs that a reduction might still happen.
Separately, results from retailers Target and Walmart this week — after Home Depot released its earnings on Tuesday — will provide further insight into consumer sentiment. In a memo dated Monday, the US Treasury Department added that “demand for Russian oil is plunging” following recent US sanctions announcements. Earlier, Tokyo tumbled as Prime Minister Sanae Takaichi prepared to unveil an economic stimulus package. Yields on 20-year Japanese government bonds hit their highest since 1999 as speculation grew that the spending bill will ramp up borrowing.
The yen slipped to around 155.48 per dollar, its weakest since January, as expectations of more interest rate hikes faded. Razaqzada said of all the worries hitting the markets, Japan was perhaps the biggest. “Markets now worry that the government is mishandling the economy, demanding higher returns to compensate for what they perceive as rising risk in holding Japanese debt,” he said.
– Key figures at around 2105 GMT –
New York – Dow: DOWN 1.1 percent at 46,091.74 points (close)
New York – S&P 500: DOWN 0.8 percent at 6,617.32 (close)
New York – Nasdaq Composite: DOWN 1.2 percent at 22,432.85 (close)
London – FTSE 100: DOWN 1.3 percent at 9,552.30 points (close)
Paris – CAC 40: DOWN 1.9 percent at 7,967.93 (close)
Frankfurt – DAX: DOWN 1.7 percent at 23,180.53 (close)
Tokyo – Nikkei 225: DOWN 3.2 percent at 48,702.98 (close)
Hong Kong – Hang Seng Index: DOWN 1.7 percent at 25,930.03 (close)
Shanghai – Composite: DOWN 0.8 percent at 3,939.81 (close)
Dollar/yen: UP at 155.53 yen from 155.23 yen on Monday
Euro/dollar: DOWN at $1.1580 from $1.1589
Pound/dollar: DOWN at $1.3146 from $1.3156
Euro/pound: FLAT at 88.09 pence
Brent North Sea Crude: UP 1.1 percent at $64.89 per barrel
West Texas Intermediate: UP 1.4 percent at $60.74 per barrel
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© 2024 AFP
