The global stock market is going down today, Nov. 21, mirroring the performance of American shares on Thursday.
In Europe, the German DAX, French CAC 40, and the British FTSE 100 fell by over 0.60%. The closely-watched Stoxx 50 Index dropped by over 1%, with most of its constituent companies being in the red.
The same crash happened in Asia, where the Nikkei 225, Shanghai Composite, China A50, and the Hang Seng indices plunged by over 2%.
A closer look shows that just Russia’s MOEX Index was up as it jumped by 2% after a report showed that Donald Trump was pushing Ukraine to reach an agreement with Russia. Such a deal would see Ukraine cede land and agree to reducing the size of its military. The US would also remove Russian sanctions.
US stock market futures were also up a bit. Dow Jones Index futures rose by 162 points, while those tied to the S&P 500 and the Nasdaq 100 were up marginally.
Stock market down amid AI bubble jitters
The global stock market is crashing as jitters on the artificial intelligence industry continued. A good example of this is Nvidia whose stock surged in the premarket session on Thursday and then fell despite publishing strong financial results a day earlier.
Nvidia’s results showed that its revenue jumped to $57 billion in the last quarter, higher than the median estimate of $55 billion. It expects that its fourth quarter revenue will surge to $65 billion, with the management predicting that its annual revenue will get to $500 billion in the near term.
Still, there are concerns that the AI industry is in a bubble as many companies have not demonstrated properly how they will monetize the technology. This explains why the top laggards in the ongoing stock market crash are companies in the tech industry.
Micron stock price crashed by 10% on Thursday, making it the top laggard in the Nasdaq 100 Index. Datadog stock fell by 9.50%, while companies like AMD, Palo Alto Networks, Sandisk, Lam Research, Palantir, Marvell, and ASML were among the top laggards.
On the other hand, companies in traditional industries like Walmart, Regeneron Pharmaceuticals, GE Healthcare, Solventum, Brown Forman, and Erie Indemnity were the top gainers in the S&P 500 Index.
Some top global stock indices have a limited exposure to the technology and AI industries. As such, the ongoing crash is because of the correlation that happens among global indices.
Concerns about the Federal Reserve remains
The stock market crash is also happening because of a report released by the Bureau of Labor Statistics (BLS) on Thursday. This report showed that the American economy added over 110k jobs in September this year, a sign the labor market was stabilizing ahead of the US government shutdown.
The report came as divisions at the Federal Reserve continued. Some Fed members have warned that inflation remains stubbornly high and urged against cutting in December. In a statement on Thursday, Michael Barr said:
“I am concerned that we’re seeing inflation still at around 3% and our target is 2%, and we’re committed to getting to that 2% target. So we need to be careful and cautious now about monetary policy, because we want to make sure that we’re achieving both sides of our mandate.”
Some other official like Jeff Schmid and Beth Hammack have urged for caution, warning that cuts will prolong inflation over time. Hammack said:
“Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets.”
The ongoing stock market crash is also because of profit taking since most of the top indices are hovering at their all-time highs, with some analysts warning that the stock market was highly overvalued.
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