UK Equities Decline Following Nvidia’s Nearly 10% Drop.
UK shares fell on Wednesday morning, following declines in both Asian and US markets, amid growing concerns about the health of the world’s largest economy. Recent data indicated that US manufacturing activity remains lackluster, leading investors to shift their focus to upcoming US jobs figures set to be released on Friday.
Nvidia, the American chip giant, experienced a significant drop, plummeting nearly 10% as enthusiasm surrounding the artificial intelligence (AI) boom began to wane. Despite this sharp decline, Nvidia’s stock is still valued at twice its price from a year ago.
The FTSE 100 index, which includes the largest companies on the London Stock Exchange, fell by 0.76% in early trading, with major European indexes also showing declines. Analysts are now attempting to predict how the Federal Reserve, the US central bank, will react in its upcoming meeting regarding interest rate policy.
On Tuesday, the S&P 500 index in New York closed down more than 2%, while the tech-heavy Nasdaq index dropped over 3%. Nvidia’s shares on the Nasdaq fell by 9.5%, erasing $279 billion (£212.9 billion) from its market valuation.
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In the long term, however, Nvidia shares are still valued at nine times their price from November 2022, when the launch of ChatGPT sparked a surge in interest in AI and increased demand for Nvidia’s chips. Other major US tech companies, including Alphabet, Apple, and Microsoft, also saw their stock prices decline on Tuesday.
On Wednesday morning, Japan’s Nikkei 225 index was down 4.4%, South Korea’s Kospi fell by 3%, and the Hang Seng index in Hong Kong dropped by 1.3%. Key Asian technology firms, such as TSMC, Samsung Electronics, SK Hynix, and Tokyo Electron, also experienced significant losses.
Overall, Asian markets have underperformed over the past year, with the Shanghai and Hong Kong indexes showing declines over the twelve-month period. However, Japan’s Nikkei has seen a 12% increase during the same timeframe.
Concerns regarding global economic growth appear to be particularly impacting exporting countries in the region, as highlighted by market analysts.
