By Tom Wilson
LONDON (Reuters) – Stocks fell globally on Wednesday, dragged down by a record sell-off in U.S. chipmaker Nvidia Corp (NASDAQ:NVIDIA) and as expectations of fading global growth hit riskier assets, sending oil prices to multi-month lows and supporting bonds.
European stocks fell 1%, with major markets in London, Paris and Frankfurt down between 0.6% and 0.9%. Semiconductor companies were the biggest losers, with ASML (AS:) Holdings down 5.4%.
The pain is expected to continue on Wall Street, where stock futures continued to decline. Nasdaq futures were down 0.4% and 0.5%, respectively.
Wall Street closed sharply lower on Tuesday, with shares of artificial intelligence company Nvidia plunging by about $279 billion, as investors retreated from their enthusiasm for AI-related stocks.
“One of the big risks is that there is this concentration in the market, and all it takes is for these names to be volatile, for it to spill over to the entire market,” said Justin Onwuekosi, chief investment officer at investment firm St. James Place.
The MSCI World Index, which tracks stocks in 47 countries, fell 0.5%.
September has historically been a bad month for stocks, although analysts have pointed to a combination of factors behind the decline, including weak U.S. manufacturing data.
Investors pointed to increased volatility as liquidity returned to markets after the summer.
Brent crude futures fell 0.6% to $73.34 a barrel, paring some earlier losses, and were last down 0.6% at $69.96, both close to their lowest since December. The contracts fell about 5% on Tuesday.
Concerns about the slowing outlook in China – the world’s largest oil importer – and the possibility of slowing global growth meaning lower demand for fuel have exacerbated the decline in oil prices.
Euro zone government bonds held on to gains. German bund yields, a benchmark, posted their biggest daily drop in a month on Tuesday.
Earlier, benchmark stock indexes in Tokyo and Taipei led the decline in Asia, each falling more than 4%. MSCI’s broadest index of Asia-Pacific shares outside Japan ended the day down 1.9%.
Asian technology stocks were hit. Japanese chip testing equipment maker Advantest Corp., a supplier to Nvidia Corp., lost 7.7%, while Taiwan’s TSMC lost more than 5%.
“There was a lot of blame. Nvidia, technology, weak US data, gloom in China,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank.
The Japanese yen benefited from the decline in stocks, rising about 0.4% to 144.89 yen per dollar. It had risen in the last trading about 0.4% to 144.90 yen.
The dollar remained stable, supported by safety-seeking requests.
Second date
Expectations of U.S. economic data due out this week have exacerbated the risk appetite, which includes job openings, jobless claims and the closely watched nonfarm payrolls report on Friday.
Given the Fed’s focus on the labor market, Friday’s release could determine whether the expected rate cut this month will be gradual or large.
“We think U.S. growth concerns are overblown and expect a strong jobs report on Friday,” said Alex Low, FX and macro strategist at TD Securities.
Economists polled by Reuters expect the U.S. economy to add 160,000 jobs in August, a rebound from the 114,000 gain in July.
Ahead of the releases, moves in currencies and U.S. Treasuries were less pronounced than those in stocks.
The benchmark index fell about two basis points to 3.82%, while the yield on two-year bonds fell to 3.84%.