Shares fell globally on Wednesday, hit by a drop in tech stocks sparked by a record sell-off for U.S. chipmaker Nvidia and as expectations of fading global growth bruised riskier assets, pushing oil prices to multi-month lows and buoying bonds.
European shares shed 1%, with major markets in London, Paris and Frankfurt down between 0.6% and 0.9%. Semiconductor companies were the biggest losers, with ASML Holdings dropping 5.4%.
The pain was set to continue on Wall Street, where stock futures extended declines. S&P 500 and Nasdaq futures were down 0.4% and 0.5% respectively.
Wall Street closed sharply lower on Tuesday, with artificial intelligence darling Nvidia sinking by a record $279 billion as investors checked their enthusiasm for AI-related stock.
“One of the big risks is that you have this market concentration, and all it takes is those names to be volatile, for it to feed through to the entire market,” said Justin Onuekwusi, chief investment officer at investment firm St. James’s Place.
The MSCI world equity index, which tracks shares in 47 countries, fell 0.5%.
September has historically been a bad month for stocks, though analysts pointed to a confluence of factors behind the rout, including weak U.S. manufacturing data.
Investors noted spiking volatility as liquidity sloshes back into markets following the summer.
Brent crude futures fell 0.6% to $73.34 a barrel, trimming some earlier losses, while U.S. crude was last down 0.6% at $69.96, both near their lowest levels since December. They fell nearly 5% on Tuesday.
Concerns over the sluggish outlook in China – the world’s biggest oil importer – and the possibility of a global slowdown that would mean reduced fuel demand have exacerbated the decline in oil prices.
Euro zone government bonds held gains. German Bund yields, a benchmark, had posted their largest one-day fall in a month on Tuesday.
Earlier, stock benchmarks in Tokyo and Taipei led the slump in Asia, each falling more than 4%. MSCI’s broadest index of Asia-Pacific shares outside Japan finished 1.9% lower.
Asian tech stocks suffered. Japanese chip-testing equipment maker Advantest, a supplier to Nvidia, lost 7.7%, while Taiwan’s TSMC shed more than 5%.
“(There) was plenty of blame to go around. Nvidia. Tech. Soft spots in U.S. data. China gloom,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank.
A beneficiary of the fall in stocks, the safe-haven Japanese yen strengthened by as much as 0.4% to 144.89 per dollar . It last traded about 0.4% higher at 144.90.
The dollar was flat, supported by bids for safety.
DATA DUE
Compounding lower appetite for risk was the prospect of U.S. economic data due this week, which includes figures on job openings, jobless claims and the closely watched non-farm payrolls report on Friday.
Given the Federal Reserve’s labour market focus, Friday’s release could determine whether a rate cut expected this month will be regular or super-sized.
“We reckon U.S. growth fears are overplayed and expect a strong payrolls report on Friday,” said Alex Loo, FX and macro strategist at TD Securities.
Economists polled by Reuters expect the U.S. economy to have added 160,000 jobs in August, a rebound from July’s 114,000 increase.
Ahead of the releases, moves in currencies and U.S. Treasuries were less marked than those seen in equities.
The benchmark 10-year U.S. Treasury yield fell nearly two basis points to 3.82%, while the two-year yield fell to 3.84%.