(Bloomberg) -- European stocks fell as worries about the health of the global economy dented sentiment ahead of key US jobs data later in the week. Technology shares tumbled, tracking an overnight slide in Nvidia Corp.
The Stoxx Europe 600 Index was down 1% by the close in London, a day after dropping by the most in almost a month. After underwhelming figures on US manufacturing in the previous session, data Wednesday showed China’s services activity expanded less than expected, while US job openings fell in July to the lowest since the start of 2021.
Nvidia shares tumbled 9.5% Tuesday, wiping out nearly $280 billion in the biggest loss of value ever for a US stock, as doubts crept in about the buzz around artificial intelligence. An investigation by the US Justice Department into potential violations of antitrust laws by Nvidia and other companies is souring the mood further.
European tech shares fell 3.2%. Commerzbank AG edged lower as the German government plans to cut its stake in the lender. Overall, European investors are navigating a period of tepid economic growth at home.
“Europe’s manufacturing sector remains weak, and earnings forecasts are rolling over,” Citigroup Inc. strategists led by Beata Manthey wrote in a note. “Geoeconomic risks and China weakness also weigh disproportionately on Europe compared to its major peers.”
European equities were trading at record highs at the end of last week, but fears about China’s economy and a slide in commodity prices have weighed on the benchmark index. The gauge is also facing tough seasonal trends, with September historically being the worst month in the year.
All eyes are now on the timing and extent of interest-rate cuts from the Federal Reserve. The monthly payrolls report due Friday is likely to provide more clues on the health of the US economy.
“The risk of a setback in the equity markets is likely to increase again,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg, adding that he sees additional pressure from a blackout period for stock buybacks and the upcoming US presidential election. “We expect more volatility over the next two months given also higher positioning and valuations levels again.”
SECTORS IN FOCUS:
- Energy stocks as oil prices continue to push lower, building on the heavy losses seen on Tuesday as the possible easing of political unrest in Libya shifted focus back to OPEC+’s plan to boost production, while demand concerns persist.
- Semiconductors stocks after US and Asian peers tumbled, putting regional benchmarks on course for their worst drops in a month amid renewed concerns of overheating in the artificial intelligence rally.
For more on equity markets:
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- Europe’s $1 Billion Convertible Bond Sales End Lull: ECM Watch
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- The Rolex Roll Call: The London Rush
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--With assistance from Michael Msika.
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