UK Stocks Drop Following Nearly 10% Nvidia Slide
Amids falls in Asian and US markets and concerns about the world's largest economy, Uk shares have dropped on Wednesday morning.
American chip giant Nvidia was hit particularly hard, slumping by almost 10% as optimism about the boom in artificial intelligence (AI) dampened.
Regardless of the fall, Nvidia's shares are still worth double their value a year ago.
The FTSE 100 index, which includes the largest companies on the London Stock Exchange, fell by 0.76% in early trading, with other major European indexes also declining.
Market analysts are now speculating on how the Federal Reserve, the U.S. central bank, will approach interest rate policy in its upcoming meeting next week.
On Tuesday in New York, the S&P 500 index closed down by more than 2%, while the tech-heavy Nasdaq dropped over 3%. Nvidia, listed on the Nasdaq, saw its shares plummet by 9.5%, wiping $279 billion (£212.9 billion) off its market value.
Despite this, Nvidia's shares remain nine times higher than they were in November 2022, when the launch of ChatGPT sparked a surge in demand for AI, driving up the value of Nvidia's chips.
Other major U.S. tech companies, including Alphabet, Apple, and Microsoft, also experienced significant share declines on Tuesday.
In Asia on Wednesday morning, Japan's Nikkei 225 dropped by 4.4%, South Korea's Kospi fell by 3%, and Hong Kong's Hang Seng index was down 1.3%.
Leading Asian tech firms such as TSMC, Samsung Electronics, SK Hynix, and Tokyo Electron also saw significant losses.
Over the past year, Asian markets have generally underperformed, with the Shanghai and Hong Kong indexes down over the last 12 months, though Japan's Nikkei has risen by 12% during the same period.
"Concerns around global growth look to be hitting exporting countries in the region particularly hard," Ms Lee added.
As well as next week's interest rate decision in the US, investors will be waiting for Friday's US jobs market report, to provide further signs on the direction the US economy is taking.
Swetha Ramachandran, fund manager for Artemis Investment Management in London, said Tuesday's US share falls were a sign that investors were beginning to doubt the Federal Reserve would make a large cut in interest rates.
“[Nvidia] did report results last week where it alluded to a natural and expected deceleration in growth: from having delivered 122% growth in the second quarter it expects to deliver 80% growth in the third quarter,” she said.
The fall might also be a reaction to reports that the US Department of Justice had issued a subpoena, requiring the firm to give evidence over anti-trust issues, she added.
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