The Japan Times - Tech selloff drags stocks down on AI bubble fears

The tech-heavy Nasdaq index was down almost two percent near midday on Wall Street, with shares in the world's most valuable company, AI chip designer Nvidia, shedding more than four percent.

"It's one thing for equity markets to suffer a general pullback, as happened during the Trump Tariff Tantrum in April," said David Morrison, analyst at Trade Nation financial services firm.

"But it's quite another to see stocks at the vanguard of AI development getting trashed. What adds to concerns is that there has been no obvious catalyst for the selloff," he added.

Massive investments in artificial intelligence have fuelled a tech rally this year, but some investors fear the valuations are now too high, sparking a selloff this week.

"Some analysts warn that this year's artificial-intelligence-led rally has finally come to a halt," said Forex.com analyst Fawad Razaqzada.

"Others suggest markets needed to cool down anyway with indices racing to record highs without much pause and new stimulus," he added.

Investors were also rocked by data showing US consumer sentiment dipped in November to its lowest level since mid-2022.

The University of Michigan's index of consumer sentiment dropped by six percent this month, preliminary estimates indicate, to a reading of 50.3 from October's 53.6 figure.

It came a day afer a report from outplacement firm Challenger, Gray & Christmas showed US layoffs hit the highest level in 22 years last month.

Investors have been forced to use private data as a guide to the state of the world's biggest economy because the longest-running US government shutdown has closed numerous departments.

The shutdown also forced the cancellation of hundreds of flights on Friday after President Donald Trump's administration ordered reductions to ease the strain on air traffic controllers who are working without pay.

While the latest jobs figures came a day after news that private hiring had increased, it sparked concerns about the labour market and put pressure on the Fed to cut borrowing costs for a third successive meeting in December.

However, comments from central bank officials suggested another reduction was not certain, echoing boss Jerome Powell's warning last week.

Markets were also pressured by official data showing China's exports fell in October for the first time in eight months as trade tensions flared in the weeks before Chinese President Xi Jinping and Trump reached a detente.

London's top-tier FTSE 100 index was dragged down by double-digit falls in the share prices of online property business Rightmove and British Airways owner IAG following earnings updates that undershot market expectations.

- Key figures at around 1640 GMT -

New York - Dow: DOWN 0.6 percent at 46,616.29 points

New York - S&P 500: DOWN 1.1 percent at 6,646.42

New York - Nasdaq Composite: DOWN 1.9 percent at 22,621.37

London - FTSE 100: DOWN 0.6 percent at 9,682.57

Paris - CAC 40: DOWN 0.2 percent at 7,950.18

Frankfurt - DAX: DOWN 0.7 percent at 23,569.96

Tokyo - Nikkei 225: DOWN 1.2 percent at 50,276.37 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 26,241.83 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,997.56 (close)

Euro/dollar: UP at $1.1576 from $1.1548 on Thursday

Pound/dollar: UP at $1.3165 from $1.3135

Dollar/yen: UP at 153.05 yen from 153.04 yen

Euro/pound: UP at 87.83 pence from 87.91 pence

Brent North Sea Crude: UP 0.3 percent at $63.56 per barrel

West Texas Intermediate: UP 0.3 percent at $59.63 per barrel

burs-bcp-lth/tw

Y.Hara--JT