Nvidia Sell-Off Hits Asia Tech Stocks, Oil Prices Plunge

European markets are bracing for a rough session as Nvidia's $279 billion loss weighed heavily on Asian tech stocks, including a 7% drop in Japan's Advantest and a 4% fall for Taiwan's TSMC. US and European stock futures also dipped following a Wall Street slump on weak US manufacturing data. Oil prices hit a nine-month low, led by a sharp drop in China’s CNOOC Ltd, down nearly 5% in Hong Kong trading.

Equities

The FTSE 100 dropped 0.8% on Tuesday, marking its biggest one-day decline in two weeks. The index was hit hard by a steep sell-off in commodity-linked stocks, driven by lower metal and crude prices. Precious metal miners saw a 3.7% fall as gold prices declined, while industrial metal miners fell 3.4%, reaching a six-month low due to concerns over weak demand from China. The oil and gas sector also slipped 2.9% after a report on a potential end to a dispute in Libya, which weighed on oil prices. Despite the broader market downturn, Rolls-Royce rose 1.7% after Cathay Pacific reported successful repairs on three of its engines, with all 48 planes expected to return to service by Saturday. Online supermarket Ocado jumped 3.1%, boosting the personal care and grocery sector, while Tesco added 1.6% after a UBS price target upgrade. Watches of Switzerland gained 6.3% after confirming its full-year forecast.

In the US, the S&P 500 fell 2.1%, the Nasdaq dropped 3.3%, and the Dow Jones slid 1.5% as stocks tumbled at the start of September, historically a weak month for markets. Technology stocks, particularly the Magnificent Seven, led the losses. Nvidia dropped nearly 10%, losing $279 billion in market value—the largest single-day loss in US history for a company. Alphabet, Apple, and Microsoft also declined by 3.6%, 2.7%, and 1.8%, respectively. The Philadelphia Semiconductor Index fell 7.8%.

Tesla’s shares fell 1.6% after a report revealed plans to produce a six-seat variant of the Model Y in China by 2025. Boeing dropped 7.3% after Wells Fargo downgraded its rating from "equal weight" to "underweight." The declines in these high-profile companies added to the broader market’s weakness, with nine out of 11 sectors in the S&P 500 recording losses, led by technology, energy, communication services, and materials. Trading volume on US exchanges rose to 12.14 billion shares, above the 20-day moving average of nearly 11 billion shares.

Forex & Commodities

The Japanese yen strengthened by 0.2% to 145.15 per dollar, rallying after a 1% gain overnight, as traders sought safe-haven assets. The Australian dollar slipped further, down 0.13% to $0.67025, following a 1.2% drop on Tuesday, while sterling remained flat at $1.3117. The US dollar held firm against most major currencies, supported by its safe-haven appeal amid concerns over the US economy.

Gold prices remained stable at $2,491.01 per ounce, while US gold futures held at $2,522.20 as traders awaited key US payrolls data later in the week, which could influence the Federal Reserve’s rate cut decisions. Gold has risen 21% this year, with some analysts suggesting it could see further gains, though short-term upside may be limited due to positioning.

Oil prices saw a sharp decline on Tuesday, with Brent crude dropping nearly 5% to $73.75 per barrel, its lowest level since December. West Texas Intermediate (WTI) fell 4.4% to $70.34. The decline came after signs of a potential resolution to a dispute halting Libyan oil production, alongside concerns about sluggish demand from China and weak US summer driving demand. Libya’s oil output had dropped significantly, and a deal to resume production could see supply returning to the market, further weighing on prices.