European stocks fell on Tuesday following a significant 7% drop in chipmaker Nvidia, which had a ripple effect on U.S. tech companies on Monday, indicating growing investor anxiety about the artificial intelligence boom. Despite this, stock markets remained close to record highs as investors shifted focus to more stable sectors. Bond yields cooled, and Japan’s yen continued to face downward pressure.
The benchmark STOXX 600 index in Europe slipped 0.3% in early trading, with its tech sub-index down 1.5%. Germany’s DAX dropped 1.2%, while Britain’s FTSE 100 remained flat. A weak earnings report from Airbus further weighed on European shares. The decline in Nvidia also affected the Nasdaq 100 and S&P 500, which fell by 1.1% and 0.5%, respectively, although the Dow Jones benefitted, rising by 0.7%, as investors turned to value sectors like energy and utilities.
Investors’ attention is divided among various events, including snap elections in France, the first U.S. Presidential debate, and the Federal Reserve’s preferred inflation gauge release. Nvidia’s shares have experienced a 13% selloff over the last three days, following a meteoric rise. Despite recent declines, Nvidia shares have still gained 190% over the past year, leading some investors to lock in profits. The continued excitement over AI’s potential and hopes for falling interest rates have kept equity indices near record highs, reflecting investor confidence in the broader economy’s health.
Source: Reuters