Global stocks slide as AI sell-off hits Asia, Europe and US
Futures for the S&P 500 and the Dow Jones Industrial Average were down 0.3 percent.
Nvidia, the computer chip giant at the center of the AI boom, is due to report earnings Wednesday. Concerns that valuations in the sector have risen too quickly have roiled global markets in recent weeks, driving volatility in economies heavily dependent on chip exports, including South Korea and Taiwan.
Also weighing on investor sentiment is the U.S. employment report expected Thursday, delayed because of the prolonged government shutdown.
Germany’s DAX fell 1.3 percent to 23,288.28, while the CAC 40 in Paris lost 1.4 percent to 8,010.60. Britain’s FTSE 100 declined 1 percent to 9,581.96.
Asian markets were hit after yields on 30-year Japanese government bonds surged to 3.31 percent, reflecting rising risks as Prime Minister Sanae Takaichi prepares to increase government spending and delay plans to rein in Japan’s large national debt.
The yen traded above 155 to the dollar, near its highest level since February. On Monday, it fell to its lowest level against the euro since 1999, when the European currency was launched.
Early Tuesday, the dollar slipped to 155.20 yen from 155.26 yen. The euro edged up to $1.1592 from $1.1593.
Tokyo’s Nikkei 225 fell 3.2 percent to 48,702.98, led by declines in tech shares. Chip maker Tokyo Electron slid 5.5 percent and equipment maker Advantest dropped 3.7 percent.
In Seoul, the Kospi fell 3.3 percent to 3,953.62. Samsung Electronics dropped 2.8 percent, while chip maker SK Hynix lost 5.9 percent.
Taiwan’s Taiex dropped 2.5 percent as TSMC, the world’s largest contract chip manufacturer, declined 2.8 percent.
Chinese markets were also caught in the sell-off. Hong Kong’s Hang Seng fell 1.7 percent to 25,930.03 and the Shanghai Composite slipped 0.8 percent to 3,939.81.
In Australia, the S&P/ASX 200 lost 1.9 percent to 8,469.10.
On Monday, the S&P 500 fell 0.9 percent, pulling further from its all-time high set late last month. The Dow fell 1.2 percent and the Nasdaq composite slipped 0.8 percent.
Nvidia fell 1.8 percent Monday but remains up nearly 40 percent this year. Other AI-linked winners also stumbled. Super Micro Computer slid 6.4 percent.
High-momentum stocks in other sectors sank as well. Bitcoin extended its decline, dragging down Coinbase Global by 7.1 percent and Robinhood Markets by 5.3 percent. Early Tuesday, Bitcoin was down 1 percent at $91,100.
Critics have warned that U.S. stocks may be poised for a pullback after prices surged since April, leaving valuations stretched.
Another potential drag for Wall Street is the Federal Reserve’s next move on interest rates. Investors had expected the Fed to continue cutting rates to support the slowing job market. But lower rates can worsen inflation, which remains above the Fed’s 2 percent target.
Fed officials have also cited the government shutdown, which delayed updates on employment and other key indicators. With less data available, some officials have suggested waiting until December before deciding on further rate cuts.
A strong jobs report Thursday would likely keep the Fed from cutting rates, while very weak numbers could stoke concern about the broader economy.
In early Tuesday trading, U.S. benchmark crude oil fell 19 cents to $59.72 per barrel. Brent crude, the international standard, lost 21 cents to $63.99 per barrel.
