Global markets fall after Wall Street tech sell-off and China investment slump
Global markets fell sharply after a technology stock sell-off fueled Wall Street’s worst day in a month, combined with weak economic data from China showing an unprecedented slump in fixed-asset investment.
European and UK Markets React
Markets across Europe and the UK tumbled on opening:
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The FTSE 100 fell by 1.1% (losing about 100 points), with major banking stocks like Barclays, Lloyds, and NatWest slumping by 3% to 3.5%. The index dropped to 9,705 after threatening the 10,000-point mark the previous day.
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The pan-European Stoxx 600 fell 0.9%.
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France’s Cac 40 dropped 0.54%, while Germany’s Dax fell almost 0.9%.
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The pound sterling fell nearly 0.5% against the dollar to $1.31 after Chancellor Rachel Reeves abandoned plans to raise headline income tax rates in the upcoming budget. UK 30-year gilts rose 12 basis points as investors reacted to the fiscal uncertainty.
Tech Sell-off and US Uncertainty
The global decline was sparked by a turbulent day on Wall Street, led by a rout in technology stocks:
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Nvidia, the $4.5 trillion tech company, led the sector decline by falling 3.6% as investors reassessed the value of AI-related businesses. This was partially triggered by Japan’s SoftBank selling its entire stake in the company.
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Other major Asian tech stocks also fell: SoftBank and SK Hynix dropped over 6%, Samsung Electronics fell 4%, and Taiwan Semiconductor Manufacturing Company dropped 1.8%.
US markets were also jittery due to ongoing uncertainty:
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Federal Reserve officials' cautious remarks caused traders to scale back wagers on a December rate cut. The probability of a cut fell sharply from 59% to 49% overnight.
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Concerns over the longest federal government shutdown in history continued to impact the economy, forcing the government to put the release of crucial inflation and jobs data on hold.
China's Economic Slump
Fears of a global slowdown were exacerbated by weak data from China:
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Fixed-asset investment shrank 1.7% in the first 10 months of the year, a record decline, according to the National Bureau of Statistics.
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The cooling economic activity led to losses in Asian equity markets: China’s CSI 300 fell 0.7%, Hong Kong’s Hang Seng dropped 0.9%, and Taiwan’s Taiex slumped by 1.4%.
Analysts noted that while the weakness in Asian markets was less profound than on Wall Street, the poor Chinese investment figures raised hopes among some traders for more stimulus from Chinese authorities.
