Global stocks experienced a sharp decline on Wednesday following Wall Street’s worst day since early August. The sell-off was triggered by a significant drop in heavyweight chipmaker Nvidia’s stock, which fell 9.5%, leading to a global decline in chip-related stocks. France’s CAC 40, Germany’s DAX, and Britain’s FTSE 100 all slipped by 0.8% in early trading.
In Asia, Japan’s benchmark Nikkei 225 suffered a 4.2% loss, closing at 37,047.61, while South Korea’s Kospi dropped 3.2%. Taiwan’s Taiex lost 4.5%, and Australia’s S&P/ASX 200 was down 1.9%. Hong Kong’s Hang Seng index declined 1.1%, and the Shanghai Composite index shed 0.7%.
The decline in global stocks was further fueled by rising oil supply, as Libya moved closer to resolving a conflict over control of the country’s oil revenue, potentially leading to increased oil production. This, coupled with growing concerns about China’s economy, the world’s largest importer of crude oil, raised doubts about future oil demand.
The S&P 500’s heaviest weight, Nvidia, fell 9.5% on Tuesday, despite surpassing high expectations for its latest profit report. This subdued performance has raised criticism that Nvidia and other Big Tech stocks had soared too high during Wall Street’s frenzy around artificial intelligence technology.
The S&P 500 sank 2.1%, erasing a significant portion of the gains from a three-week winning streak that had brought it close to its all-time high. The Dow Jones Industrial Average dropped 626 points, or 1.5%, from its own record set on Friday. The Nasdaq composite fell 3.3% as Nvidia and other Big Tech stocks led the decline.
Treasury yields also stumbled in the bond market after a report showed a contraction in American manufacturing for August, worse than economists had anticipated. The manufacturing sector has been contracting for most of the past two years, with companies showing reluctance to invest in capital and inventory due to current federal monetary policy and election uncertainty.
The week’s economic reports, including updates on job openings and the growth of U.S. services businesses, will shed light on the state of the economy. The highlight will likely be Friday’s report on the number of jobs created by U.S. employers in August.