Global stock markets slumped on Tuesday amid heightened risk aversion, as investors grew wary of the sector linked to artificial intelligence (AI) ahead of Nvidia’s earnings and reassessed expectations of rate cuts from the U.S. Federal Reserve (Fed).
“This week feels like the moment before the curtain rises,” said Stephen Innes, manager at SPI AM, noting that “on one side, Nvidia’s results — the oxygen tank of the 2025 AI super-cycle — are approaching, and on the other, a long-delayed U.S. jobs report that could either validate or shatter the last hopes of a December rate cut” from the Federal Reserve.
In Asia, Tokyo’s Nikkei index ended sharply lower, down 3.22%, dragged by concerns over AI and rising tensions between Japan and China following comments by Japanese Prime Minister Sanae Takaichi regarding Taiwan, an island claimed by Beijing.
“The contagion spread rapidly across the region,” Innes observed. Seoul’s Kospi fell 3.32%.
In China, Hong Kong’s Hang Seng index was down 1.83% in late trading. Shanghai’s market lost 0.81% and Shenzhen dropped 0.92%.
Tech stocks were among the hardest hit as fears grew over the explosive rally in AI-related valuations.
Japanese memory-chip specialist Kioxia plunged 8.11%, and tech-investment giant SoftBank Group tumbled 7.47%, while Tokyo Electron fell 5.47%.
Chinese internet titan Tencent shed 2.04% in late trading. South Korean memory-chip maker SK Hynix dropped 5.94%.
In Europe, early trading saw ASM International down 1.71%, ASML down 0.58%, BE Semiconductor Industries down 2.04%, STMicroelectronics down 2.23% and Infineon down 2.81%.
“Appetite for AI is under pressure due to circularity concerns,” meaning the proliferation of deals struck among major industry players, “and fears of a bubble,” noted Ipek Ozkardeskaya, analyst at Swissquote.
“And on top of AI-related worries, the risk-off sentiment has been reinforced by the latest Fed signals, as investors continue to discount the probability of a rate cut in December,” recalled Jim Reid, economist at Deutsche Bank.
Nvidia, the Tech Sector’s Barometer
All eyes are now on the earnings results of U.S. chip giant Nvidia, expected Wednesday after the close of Wall Street.
“Analysts are expecting another exceptional quarter: roughly 54 billion dollars in revenue, representing year-on-year growth of 50–60%,” estimated Ozkardeskaya.
But despite the possibility of yet another phenomenal quarter from the world’s largest company by market capitalization and the flagship of the AI boom, the analyst warns that nothing guarantees investors will react positively, with bubble fears still looming.
“This revenue figure will be a crucial test to assess whether enthusiasm around AI is still grounded in solid fundamentals,” explained John Plassard, head of investment strategy at Cité Gestion Private Bank.
“The cycle needs a new proof-point — and everyone knows only Nvidia can deliver it,” summed up Innes.
Bitcoin Falls Below $90,000
“The cryptocurrency market is entering another zone of turbulence, and the most speculative assets are taking the hardest hit,” noted Plassard.
The leading cryptocurrency was down 5.48% at $90,680 around 08:30 GMT, shortly after touching $89,231.51 — falling below the $90,000 threshold for the first time since April. It has slid roughly 28% since its October record.
“The drop is all the more significant given that bitcoin itself has lost nearly $600 billion in market capitalization since its historical October peak, wiping out all its gains for the year,” Plassard added.
Bitcoin is now down nearly 4.5% since January 1.
