Global financial markets experienced a new wave of volatility as a sharp correction in major technology stocks and disappointing economic indicators from China triggered broad-based declines across regions.

The FTSE 100 fell 1.1%, closing around 9,698 points, after approaching the 10,000-point threshold earlier in the week. UK banking stocks,Barclays, Lloyds, and NatWest were among the steepest decliners, dropping between 2.7% and 3.6%. The pound weakened against the dollar following Chancellor Rachel Reeves’s decision to withdraw a proposed income tax increase in the upcoming budget.

In the United States, markets opened lower but staged partial recoveries. The S&P 500 ended flat after its weakest session in a month, while the Dow Jones Industrial Average closed 0.7% lower. The Nasdaq Composite initially fell 1.8% before reversing losses to finish slightly positive, reflecting mixed sentiment toward the technology sector.

Across Europe, equities opened in negative territory, with the Stoxx 600 down 0.9%, while France’s CAC 40 and Germany’s DAX declined 0.54% and 0.9%, respectively. Asian markets mirrored this softness: Japan’s Nikkei dropped 1.8%, South Korea’s Kospi plunged 2.6%, and Australia’s main index lost 1.5%, weighed down by the global tech pullback.

The sell-off was intensified by renewed concerns over valuations in artificial intelligence linked companies. Nvidia, valued at roughly $4.5 trillion, fell 3.6% after SoftBank divested its entire stake sparking sector-wide declines. Major Asian semiconductor names, including SoftBank, SK Hynix, Samsung Electronics, and TSMC, also posted losses.

Investor sentiment weakened further on signs of a deeper-than-expected slowdown in China. National Bureau of Statistics data revealed that fixed-asset investment contracted 1.7% in the first ten months of the year,its steepest drop on record. China’s CSI 300 fell 0.7%, while Hong Kong’s Hang Seng declined 0.9% and Taiwan’s Taiex slid 1.4%.

US market uncertainty was compounded by the prolonged federal government shutdown, which has halted the release of key economic indicators, including inflation and labor data. Additionally, several Federal Reserve officials have signaled caution about the likelihood of an imminent rate cut.

Analysts highlighted the conflicting drivers of market sentiment. According to Deutsche Bank’s Jim Reid, investor mood has swung between relief over the shutdown’s end and concerns about stretched valuations in the AI sector. Probability estimates for a December Fed rate cut have fallen from 59% to 49% in recent days. Capital.com’s Kyle Rodda noted that while the tech-led correction has been more severe in the US, Asian markets remain sluggish as investors reassess the sustainability of returns in AI-driven investments.

In currency and fixed-income markets, the pound slipped 0.5% to $1.31, while yields on UK 30-year gilts rose 12 basis points as markets digested the policy implications of the revised budget stance.

Source: The Guardian