Nvidia share price fall and US growth data spark global sell-off

Global stocks fell sharply after downbeat economic data reignited concerns about the fragility of growth in the United States.

Wall Street’s S&P 500 index had its steepest daily fall in a month on Tuesday and the sell-off spread to Asia in overnight trading and European stock markets on Wednesday morning.

Traders were unsettled by data showing that the US manufacturing sector contracted more than expected.

Also weighing on stocks was a near 10 per cent fall in shares in Nvidia, the Nasdaq-listed AI chip maker, partly down to a report that it had been subpoenaed by the US Justice Department, which is investigating its dominance in AI chips. Nvidia’s $279 billion decline was the largest monetary fall for a single stock in history, Deutsche Bank said.

US jobs figures will be released later this week, which could amplify anxieties about the world’s largest economy. Another bleak jobs report would ignite expectations that the US Federal Reserve will cut interest rates by a larger 50 basis points at its next meeting on September 18. Investors have ramped up their bets on a bigger rate reduction later this month to around a one-in-three chance.

The S&P 500 index shed 2.12 per cent on Tuesday, its largest daily decline since August 5. The tech-heavy Nasdaq fell by 3.26 per cent, while the Dow Jones Industrial Average slipped by 1.51 per cent.

Analysts at Deutsche Bank, the German investment bank, said: “As September got going after the Labor Day holiday on Monday, the month yesterday started living up to its billing as the worst month of the year for risk with a notable sell-off.”

Oil prices fell rapidly by about 5 per cent on Tuesday after signs that a deal had been reached to end disruption to Libyan crude production and exports. On Wednesday morning, Brent crude fell by a further 1.21 per cent to $72.89 a barrel.

Shares in Shell and BP fell, helping to drag the FTSE 100 down by 0.78 per cent, or 64.46, to 8,234.01 points. Scottish Mortgage Investment Trust, which invests in big US technology stocks, lost 2.4 per cent. European shares also kicked off the day poorly, with the pan-continental Stoxx 600 off by 1.06 per cent, or 5.53, to 514.32 points.

In Asia, Japan’s Nikkei 225 indes dropped 4.24 per cent and Hong Kong’s Hang Seng index fell 1.10 per cent. In South Korea, a big producer of computer chips, the Kospi stock index fell 3.15 per cent.