European equities tumbled on Tuesday, mirroring the steep selloff seen overnight on Wall Street as renewed concerns over stretched technology valuations weighed heavily on sentiment ahead of Nvidia’s closely watched earnings report.
At 08:05 GMT, Germany’s DAX fell 1.3%, France’s CAC 40 slid 1.3% and the U.K.’s FTSE 100 dropped 1%.
AI Valuation Fears Drag Global Markets Lower
Investors continued to pull back from mega-cap tech stocks amid rising doubts about the sustainability of AI-driven valuations. Ahead of Nvidia’s latest quarterly results, due Wednesday, traders dumped high-growth names, sending the major U.S. indices sharply lower: the Dow Jones Industrial Average fell more than 500 points (1.2%), while the S&P 500 and Nasdaq Composite also ended in the red.
Alphabet CEO Sundar Pichai cautioned in a BBC interview that “every company would be affected” if the AI boom were to unwind. He described the surge in AI-linked investment as an “extraordinary moment,” while also pointing to signs of “irrationality” creeping into the current enthusiasm.
Concerns about overheating come as questions mount over Nvidia’s meteoric valuation expansion — a move that has underpinned broader AI market optimism over the past three years.
Focus Shifts to U.S. Data as Government Reopens
Europe’s economic calendar is light on Tuesday, leaving attention squarely on the U.S. as fresh datasets begin to emerge following Washington’s federal government reopening.
August factory orders are due later in the day, but the market’s primary focus remains on Thursday’s September nonfarm payrolls report, which will provide important clues about labour-market momentum and future Federal Reserve decisions.
Fed Governor Christopher Waller on Monday warned of risks facing the job market and called for policymakers to support another 25-basis-point cut at the December 9–10 FOMC meeting.
Rate-cut expectations have wavered: CME FedWatch now shows markets pricing in roughly a 40% chance of a December cut, down from 55% the previous week.
Corporate Headlines: Imperial Brands, Crest Nicholson, Akzo Nobel
Across Europe, company news added further movement to individual stocks:
- Imperial Brands (LSE:IMB) reported a nearly 5% increase in annual adjusted operating profit, driven by higher pricing and growing demand for reduced-risk products.
- Crest Nicholson (LSE:CRST) warned its full-year profit is likely to land at the lower end — or slightly below — prior guidance due to continued housing-market softness and uncertainty surrounding upcoming tax policy decisions.
- Akzo Nobel (EU:AKZA) confirmed plans to merge with U.S. rival Axalta Coating Systems (NYSE:AXTA) in a deal that will create a combined paint and coatings business valued at about $25 billion.
Oil Slips as Russian Exports Resume
Oil prices weakened as supply concerns eased following the restart of operations at Russia’s key Black Sea export hub.
Brent crude fell 0.9% to $63.64 a barrel, while West Texas Intermediate slid 1% to $59.29.
Russia’s Novorossiysk port resumed loadings on Sunday after a two-day halt caused by a Ukrainian drone and missile strike. Exports from Novorossiysk and the nearby Caspian Pipeline Consortium account for roughly 2.2 million barrels a day — around 2% of global supply.
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