LDN - Business

Nvidia sell-off, growth concerns hit global markets

[September 04, 2024] By Tom Wilson, Rae Wee and Tom Westbrook

LONDON/SINGAPORE (Reuters) -Shares across the world fell on Wednesday, pummeled by a drop in tech stocks after a record sell-off for U.S. chipmaker Nvidia and as expectations of fading global growth hit riskier assets, pushing oil prices to multi-month lows.

European shares shed 1% by 0747 GMT, while other major European markets from London to Frankfurt lost around 0.7%. Semiconductor companies were the biggest losers. ASML Holdings dropped 5.3%.

The pain was set to continue on Wall Street, where stock futures extended declines. S&P 500 futures eased 0.4% and Nasdaq futures shed 0.6%.

Wall Street closed sharply lower on Tuesday, with AI darling Nvidia sinking by a record $279 billion as investors checked their enthusiasm for artificial intelligence.

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.

"Volatility obviously is picking up," said Jason Teh, chief investment officer at Vertium Asset Management. "We had a first taste of it at the beginning of August...last night we had this macro catalyst (and) the market's worried about further economic slowdown."

Brent crude futures fell more than 1% to $72.86 a barrel while U.S. crude was down 1.4% at $69.38, both their lowest levels since December. They had fallen 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. [O/R]

Earlier, stock benchmarks in Tokyo and Taipei led the slump in Asia, each falling more than 3%, while MSCI's broadest index of Asia-Pacific shares outside Japan was last 1.9% lower.

Asian tech stocks suffered, with Japanese chip-testing equipment maker Advantest, a supplier to Nvidia, down 7.7%. Taiwan's TSMC fell more than 5%.

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A media person stands in front of the stock quotation board during a ceremony marking the end of trading in 2022 at the Tokyo Stock Exchange (TSE) in Tokyo, Japan December 30, 2022. REUTERS/Issei Kato/File Photo

"(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 DUMP

U.S. economic data due this week includes figures on job openings, jobless claims and the closely watched nonfarm payrolls report out 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 3.8253%, while the two-year yield fell more than three bps to 3.8528%.

(Reporting by Tom Wilson in London and Rae Wee and Tom Westbrook in Sydney; Editing by Sam Holmes and Barbara Lewis)

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