Savers’ pension funds and investments took a hit yesterday as global stock markets fell sharply over fears of a US recession.
Share prices tumbled around the world as investors were spooked by the possibility of a slowdown in the world’s largest economy.
The sell-off was also prompted in part by concerns that artificial intelligence may have been over-hyped after US tech stocks made huge gains this year.
Google owner Alphabet and Facebook‘s parent company Meta were among the businesses to suffer in the market fall.
Apple’s share price also dipped after billionaire investor Warren Buffett slashed his stake in the iPhone maker by more than $50billion (£39billion).
Savers’ pension funds and investments took a hit as global stock markets fell sharply over fears of a US recession (stock image)
Apple’s share price also dipped after billionaire investor Warren Buffett slashed his stake in the iPhone maker by more than $50billion (£39billion)
Shares in computer chipmaker Nvidia, which was briefly the most valuable company in the world earlier this year thanks to the AI boom, also fell.
Rupert Thompson, chief economist of asset management firm IBOSS, said: ‘Although these companies are much better positioned than their equivalents in the 2000 tech bubble, the AI-related optimism had become overdone and valuations too high.’
Yesterday’s turmoil saw the Japanese stock market suffer its biggest one-day drop since ‘Black Monday’ in 1987.
The market turbulence was sparked by US economic data that last week raised doubts over policymakers’ ability to slow inflation while avoiding a recession.
Official figures revealed on Friday that American employers added fewer jobs than expected and unemployment was the highest since October 2021. Analysts accused the US Federal Reserve, the country’s central bank, of leaving an interest rate cut too late.
The Fed held rates at a two-decade high of 5.25 per cent to 5.5 per cent at its last meeting – but is expected to announce a cut in September.
However, some traders were yesterday betting that US policymakers will make an emergency decision to lower borrowing costs before the next meeting.
Google owner Alphabet and Facebook’s parent company Meta were among the businesses to suffer in the market fall
The FTSE 100 tumbled more than three per cent in its biggest drop so far this year
Meanwhile, the FTSE 100 – which tracks London’s largest listed companies–- tumbled more than three per cent in its biggest drop so far this year. The blue-chip index regained some of its losses to close 2.04 per cent down last night.
Household names including high street banks such as Barclays, NatWest and Lloyds were among the stocks to lose value. Asia-focused HSBC – Europe’s largest bank – fell 1.65 per cent.
Some of the biggest losers of the day were London-listed trusts with shares in American tech firms. Pershing Square Holdings, which invests in North American Stocks, tumbled as much as 8.29 per cent before paring its losses to close 2.95 per cent down.
Scottish Mortgage Investment Trust, which holds stakes in Nvidia, semiconductor industry supplier ASML and Amazon, saw its share price drop nearly 10 per cent. It closed down 5.56 per cent.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘It’s hard not to look at the headlines and succumb to panic, but corrections happen and looking back since the start of the year the FTSE350 is still in a better position than it was coming into 2024.’
