Wall Street Falls Like Most European Exchanges Ahead of ECB Decision

On Wall Street, stock prices sharply fell on Wednesday, following Nvidia’s warning of a massive cost due to the trade war and a message from Fed Chairman Jerome Powell that economic growth is slowing.

The Dow Jones index slid 1.73 percent to 39,669 points, while the S&P 500 plummeted 2.24 percent to 5,275 points, and the Nasdaq index fell 3.07 percent to 16,307 points.

Among the biggest losers, with a price drop of nearly 7 percent, was Nvidia’s stock, after the chip manufacturer reported that U.S. restrictions on the sale of certain chips to China and other countries would cost it about $5.5 billion.

As a result, the stock prices of several other chip manufacturers also fell, making the index for that sector the biggest loser yesterday with a decline of 4 percent.

– Companies are starting to report on the impact of the trade war, and this is fueling uncertainty – says Bill Northey, director at U.S. Bank Wealth Management.

And that there are reasons for uncertainty was confirmed by Federal Reserve Chairman Powell, who at an economists’ gathering stated that higher-than-expected tariffs will likely mean higher inflation and slower economic growth.

The Fed, Powell emphasized, will wait for more economic data before taking any action on interest rates.

As a result, investors’ hopes that the central bank might soon lower rates to support economic growth and capital markets have diminished.

– Powell confirmed what investors are worried about, which is that the trade war will likely slow economic growth and keep inflation elevated – says Sam Stovall, strategist at CFRA Research.

Most European Exchanges Fell Ahead of ECB Decision

On most European exchanges, stock prices fell on Thursday morning, just like on Wall Street the day before, although the European Central Bank (ECB) is expected to cut interest rates for the third time this year.

The STOXX 600 index of leading European stocks was down 0.3 percent at 9:30 AM.

Meanwhile, the London FTSE index weakened by 0.74 percent to 8,214 points, and the Paris CAC fell by 0.41 percent to 7,300 points. The Frankfurt DAX, on the other hand, strengthened by 0.09 percent to 21,330 points.

Thus, European exchanges are following yesterday’s sharp decline on Wall Street, where the Dow Jones index slid 1.7 percent, while the S&P 500 fell 2.2 percent, and the Nasdaq index dropped 3.1 percent.

This is a consequence of the sharp decline in stock prices of chip manufacturers, including Nvidia, as well as fears of a weakening U.S. economy.

Asian Exchanges Rose

On Asian exchanges, stock prices rose this morning. The MSCI Asia-Pacific index was up 0.4 percent at 9:30 AM, recovering some of the losses from the previous day.

The Japanese Nikkei index strengthened by 0.9 percent, while stock prices in Shanghai, Australia, South Korea, and Hong Kong rose between 0.2 and 1.6 percent.

On the Tokyo Stock Exchange, stock prices rose thanks to news of progress in negotiations between the U.S. and Japan regarding tariffs.

This also encouraged investors on other exchanges in the region, who hope for a de-escalation of tariff tensions.

Chinese exchanges, on the other hand, rose as the technology sector somewhat recovered after yesterday’s sharp decline, but also thanks to the authorities’ message about new measures to combat the real estate market crisis.

China Uses Non-Tariff Countermeasures

Additionally, the Chinese Ministry of Foreign Affairs stated this morning that China will no longer pay attention if the U.S. continues its game with tariff numbers. This is a response to yesterday’s threat from Washington to increase reciprocal tariffs on imports from China to a total of 245 percent due to its countermeasures.

While Washington focused on the tariff war, China has introduced a series of non-tariff restrictive measures. Among other things, in service sectors such as finance, consulting, and tourism, where the U.S. has had a significant surplus in trade with China for years, analysts say.

– The U.S. and China have become entangled in an unprecedented and costly game of chicken, and it seems that neither side intends to back down – says Ting Lu, an economist at Nomura.