Global Stock Market Decline
Global stock markets experienced a significant drop on Friday, largely influenced by Wall Street’s recent downturn amid worries related to AI advancements and rising interest rates.
Oil prices surged, while the S&P 500 futures declined by 0.3%, and the Dow Jones Industrial Average futures saw a decrease of 0.2%.
In early trading across Europe, the UK’s FTSE 100 fell over 1.1%, landing at 9,704.41. Germany’s DAX dropped by 0.7%, to 23,876.94, and Paris’s CAC40 index fell by 0.4%, closing at 8,198.79.
In South Korea, the Kospi index decreased by 3.8% to 4,011.57, as a local chipmaker announced a partnership with Nvidia, an AI chip supplier. Samsung Electronics shares fell by 5.5%, and SK Hynix saw an 8.5% drop.
Taiwan’s Tyex dropped by 1.8%, mainly due to declines in technology stocks.
The Nikkei Stock Average in Japan fell nearly 1.8% to 50,376.53 yen, reversing previous gains, with SoftBank Group leading the losses at 6.6%.
The Chinese stock market also faced declines, with Hong Kong’s Hang Seng Index falling nearly 1.9% to 26,572.46, and the Shanghai Composite Index down 1% to 3,990.49.
Recent data indicated that China’s factory output rose by only 4.9% year-on-year in October, marking the lowest increase in 14 months. This was a drop from September’s 6.5% and below the expected 5.5%. Investments in fixed assets, such as factory equipment, also declined by 1.7% for the January-October period compared to the previous year.
The ongoing challenges in real estate investment have continued to hold back capital investment growth.
In Australia, the S&P/Australian Securities Exchange 200 Index fell by 1.4% to 8,634.50, as better-than-expected employment data reduced hopes for an interest rate cut from the Reserve Bank of Australia.
India’s BSE Sensex dipped nearly 0.4% as well.
The U.S. stock market had a particularly poor showing on Thursday, experiencing one of its worst days since the spring downturn. Investor sentiment remains unsettled, particularly regarding whether anticipated interest rate cuts will actually happen.
The S&P 500 index fell further, down 1.7%, marking its worst day this month, while also being the second-worst day since the notable drop in April. The Dow Jones Industrial Average also fell by 1.7%, and the Nasdaq Composite decreased by 2.3%.
Nvidia, a leading semiconductor company, had a considerable impact on the market, dropping by 3.6%. Other AI-related stocks also faced declines, like Super Micro Computer at 7.4%, Palantir Technologies at 6.5%, and Broadcom at 4.3%. This led to growing concerns about the stability of AI stocks after their meteoric rise earlier this year.
Despite AI stocks showing significant gains, such as Palantir’s nearly 174% rise year-to-date, there are cautious comparisons to the dot-com bubble of 2000, which ended in substantial losses for investors.
Moreover, non-AI stocks across Wall Street also fell amid traders’ concerns regarding the Federal Reserve’s potential decisions. Many are now questioning the likelihood of further interest rate cuts in December.
While lower interest rates can stimulate economic growth and increase prices for investments, they can also contribute to inflation. U.S. stock prices, which have already surged due to expectations of rate cuts, might face declines if those cuts do not materialize.
Expectations for a third cut in the key interest rate have substantially decreased recently. Traders currently view a potential cut as having about a 51.9% chance of occurring, down from almost 70% a week earlier, based on CME Group data.
In early trading on Friday, benchmark U.S. crude oil prices rose by 74 cents to $59.43 per barrel, with Brent crude increasing by 69 cents to $63.70 per barrel.
The dollar strengthened, rising to 154.68 yen from 154.54 yen, while the euro slightly declined from $1.1635 to $1.1627.
