Global Stock Markets Decline Due to Nvidia and Slowing Chinese Economy

Stock indices in Europe, Asia, and America recorded declines on Thursday, primarily due to a sharp drop in Nvidia’s stock prices and pressure on the technology sector, as well as slower growth in the Chinese economy affecting Asian markets.

On Wall Street, stock indices experienced their largest daily drop in over a month on Thursday. The Dow Jones slid 1.65 percent to 47,457 points, while the S&P 500 plummeted 1.66 percent to 6,737 points, and the Nasdaq index fell 2.29 percent to 22,870 points.

The technology sector is under pressure from capital reorientation

The technology sector was under the most pressure yesterday, which has been a frequent occurrence in recent weeks, as investors fear that stock prices in this sector are too high. This sector has seen strong growth for a long time, fueled by the euphoria surrounding artificial intelligence development, but now some investors believe that technology stock prices are too high, prompting them to shift capital to other sectors. Yesterday, among others, Nvidia, Broadcom, and Tesla stocks fell between 3.6 and 6.6 percent.

“There is a lot of uncertainty regarding the state of the U.S. economy. We are going through a small correction in the artificial intelligence sector, and we are also seeing a rotation of capital in the market,” says Peter Cardillo, an economist at Spartan Capital Securities.

Fed and uncertainty regarding interest rates

Negative impacts on the market are also stemming from uncertainty regarding interest rates. Just recently, investors were convinced that the Fed would further reduce rates by 0.25 percentage points at the December meeting. However, this is becoming less certain as many Fed officials cautiously indicate that inflation remains significantly above the target levels of around 2 percent. How inflation is moving in the U.S. is not known, just as other economic indicators have been unknown in recent weeks due to federal agencies not operating since the beginning of October.

They resumed operations yesterday after a record 43-day shutdown, so normalization of the release of official economic indicators is expected in the coming weeks.

“The fundamental question is whether the inflation driven by increased tariffs is temporary and one-off. This is why Fed officials are uncertain about further interest rate cuts,” explains Jake Dollarhide, an analyst at Longbow Asset Management.

European and Asian markets follow negative trend

Stock prices also fell on European exchanges yesterday. The London FTSE index slipped 1.05 percent to 9,807 points, while the Frankfurt DAX fell 1.39 percent to 24,041 points, and the Paris CAC dropped 0.11 percent to 8,232 points.

As for Asian markets, the MSCI Asia-Pacific index, excluding Japan, was down more than 1 percent around 7:00 AM after rising in the previous four days. This morning, stock prices in India, Shanghai, Australia, Hong Kong, Japan, and South Korea fell between 0.1 and 3.4 percent.

Chinese economy slows Asian markets

Asian investors were concerned by data released this morning showing that growth in the Chinese economy is slowing. Retail sales increased by 2.9 percent year-on-year in October, slower than the previous month, and industrial production also recorded a slowdown in growth to 4.9 percent annually. Additionally, in the first ten months of this year, fixed asset investments, including real estate, fell by 1.7 percent compared to the same period last year.

As a result, along with the correction in stock prices in the technology sector, Asian markets are following the direction of Wall Street yesterday, where stock indices recorded their largest daily drop in over a month.

Dollar weakens, oil rises

In the currency markets, the value of the dollar against a basket of currencies has fallen, putting it on track for a weekly loss of about 0.45 percent. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 99.11 points this morning, close to its lowest level in three weeks, while it was 99.56 points at the same time yesterday. Meanwhile, the dollar’s exchange rate against the Japanese currency slipped from yesterday’s 154.95 to 154.45 yen. The U.S. currency has also weakened against the euro, with the euro price reaching 1.1640 dollars, compared to 1.1585 dollars at the same time yesterday.

Oil prices, on the other hand, have risen. On the London market, the price of a barrel jumped 1.59 percent to 64.00 dollars, while on the U.S. market, a barrel increased by 1.69 percent to 59.70 dollars.