European stocks fell on Tuesday after a 7% drop in chipmaker Nvidia dragged down U.S. tech companies on Monday, in a sign of nervousness about the artificial intelligence boom.
Stock markets remained close to record highs, however, as investors shifted into less flashy names. Bond yields cooled and Japan’s yen stayed under pressure.
Investors’ attention is being pulled in multiple directions, with snap elections in France starting at the weekend; the first U.S. Presidential debate on Thursday; and the release of the Federal Reserve’s preferred gauge of inflation on Friday.
Yet the focus has been on a 13% selloff in Nvidia shares over the last three days, since the chipmaker rocketed higher to briefly become the world’s biggest company last week.
Europe’s benchmark STOXX 600 index slipped 0.3% in early trading, with the STOXX tech index down 1.5%.
Germany’s DAX stock index was 1.2% lower while Britain’s FTSE 100 was flat. A weak earnings update from aeroplane-maker Airbus also weighed on European shares.
The drop in Nvidia dragged down the Nasdaq 100 1.1% and the S&P 500 0.5% on Monday.
But the Dow Jones benefitted, rising 0.7%, as investors shifted into companies that are seen as better value in sectors like energy and utilities.
“To put things in context, (Nvidia) shares have still gained 190% on a 12-month view, so it’s no surprise some investors are locking in some profits,” said Derren Nathan, equity researcher at broker Hargreaves Lansdown.
Equity indices remain very close to record highs in the U.S. and Europe, despite the recent dip, thanks to excitement over the potentially transformative power of AI and hopes that interest rates will soon be falling.
Nathan said the rotation into other sectors was “a vote of confidence by investors in the health of the broader economy”.
European stocks fell on Tuesday after a 7% drop in chipmaker Nvidia dragged down U.S. tech companies on Monday, in a sign of nervousness about the artificial intelligence boom.
Stock markets remained close to record highs, however, as investors shifted into less flashy names. Bond yields cooled and Japan’s yen stayed under pressure.
Investors’ attention is being pulled in multiple directions, with snap elections in France starting at the weekend; the first U.S. Presidential debate on Thursday; and the release of the Federal Reserve’s preferred gauge of inflation on Friday.
Yet the focus has been on a 13% selloff in Nvidia shares over the last three days, since the chipmaker rocketed higher to briefly become the world’s biggest company last week.
Europe’s benchmark STOXX 600 index slipped 0.3% in early trading, with the STOXX tech index down 1.5%.
Germany’s DAX stock index was 1.2% lower while Britain’s FTSE 100 was flat. A weak earnings update from aeroplane-maker Airbus also weighed on European shares.
The drop in Nvidia dragged down the Nasdaq 100 1.1% and the S&P 500 0.5% on Monday.
But the Dow Jones benefitted, rising 0.7%, as investors shifted into companies that are seen as better value in sectors like energy and utilities.
“To put things in context, (Nvidia) shares have still gained 190% on a 12-month view, so it’s no surprise some investors are locking in some profits,” said Derren Nathan, equity researcher at broker Hargreaves Lansdown.
With Reuters inputs
