Global markets faced renewed volatility following a tech-driven sell-off on Wall Street and alarming economic data from China, highlighting an unprecedented slump in investment. Wall Street experienced its worst day in a month, with tech stocks leading losses amid valuation concerns. The Nasdaq Composite initially fell 1.8% before recovering slightly to end up 0.1%, while the Dow Jones declined 0.7%, and the S&P 500 closed flat after early losses.
In Europe, the FTSE 100 dropped 1.1% to close at 9,698 points, weighed down by major banking stocks including Barclays, Lloyds, and NatWest, which fell between 2.7% and 3.6%. France’s Cac 40 and Germany’s DAX fell 0.54% and 0.9% respectively, while the pan-European Stoxx 600 dropped 0.9% at the open. The UK pound weakened against the US dollar after Chancellor Rachel Reeves abandoned plans to raise income tax rates in the upcoming budget.
Asian markets also reacted sharply to Wall Street’s tech slump and weak Chinese data. Japan’s Nikkei declined 1.8%, South Korea’s Kospi fell 2.6%, and Australia’s benchmark dropped 1.5%. Chinese equities were affected by a record 1.7% contraction in fixed-asset investment over the first ten months of the year. The CSI 300 index fell 0.7%, Hong Kong’s Hang Seng dropped 0.9%, and Taiwan’s Taiex declined 1.4%.
Nvidia, the $4.5 trillion AI-focused technology company, led the sector’s decline, falling 3.6% after SoftBank sold its entire stake. Other major chipmakers also suffered, with SK Hynix down over 6%, Samsung Electronics dropping 4%, and Taiwan Semiconductor Manufacturing Company losing 1.8%. Investor concerns centered on AI sector valuations and potential returns, driving the sell-off.
Market jitters were further fueled by uncertainty in the US economy following the longest federal government shutdown in history, which delayed key inflation and jobs data. Analysts also pointed to reduced expectations for a US rate cut in December, adding to the cautious sentiment.
Deutsche Bank analyst Jim Reid noted the week’s volatility reflected a mix of relief over the government shutdown ending and concerns over AI valuations and Fed rate decisions. Kyle Rodda from Capital.com highlighted that while Asian markets were less severely affected than US equities, sluggish risk appetite persisted, particularly after disappointing Chinese investment figures raised expectations for additional stimulus.
The UK pound dropped nearly 0.5% to $1.31, while UK 30-year gilt yields rose 12 basis points as investors considered the impact of the chancellor’s tax policy reversal ahead of the budget announcement on November 26. Overall, global financial markets remain on edge amid a combination of tech sector sell-offs, slowing Chinese investment, and policy uncertainties in major economies.