Asian stocks took a hit on Wednesday as chipmakers dragged the region into red, mirroring Wall Street’s sharpest drop in a month.
European futures followed suit, pointing to further losses.
Investors wiped $279 billion from Nvidia’s valuation, signaling a potential shift in market leadership.
Oil prices plunged to year-to-date lows, while Japan’s Nikkei dropped over 3%, and shares across Asia ex-Japan slid nearly 2%.
The mood was cautious, with traders eyeing global growth signals and questioning the staying power of market leaders like Nvidia.
Nick Ferres of Vantage Point Asset Management noted that the ISM manufacturing index dampened optimism around growth.
Leading indicators suggest macroeconomic conditions could worsen, and current market valuations might not compensate enough for these risks.
He fears a potential drawdown in the coming weeks.
While some remain optimistic, like Sydney-based portfolio manager Jun Bei Liu, who observed there is “nothing fundamentally wrong” with the market and that rate cuts could offer support, investor sentiment remains jittery.
Jason Teh of Vertium Asset Management expressed concerns about the pace of the economic slowdown, cautioning that if Nvidia, Apple, and Microsoft can’t sustain the market, it could signal a bear market ahead.
In Hong Kong, institutional investors echoed the concern that this time it’s not just about technical factors but a deeper issue rooted in the U.S. economy.
Steven Leung of UOB Kay Hian remarked that recent signals are more concerning because they stem from the U.S. economy, which suggests a more fundamental issue rather than just an unwind of trades.
As tech giants continue to struggle, there’s anticipation of a broader rotation.
Michael Arone of State Street Global Advisors said we’ll likely see leadership shift away from technology stocks, helped by falling inflation and interest rates.
However, short-term caution is widespread. Sam Stovall of CFRA mentioned that investors are likely reacting to seasonal trends, with worries about the possibility of declines in both
September and October, particularly during an election year.
The turbulence follows Nvidia’s earnings report, which exceeded expectations but showed diminishing outperformance quarter by quarter.
Steve Sosnick of Interactive Brokers noted that there’s a “bit of a post-Nvidia earnings hangover.”
As investors shift their strategies, gravity seems to be pulling the market down.
As business leaders recalibrate, one thing is clear: the market is evolving, and investors are adjusting to the changing playbook.
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