Global markets slide as valuations weigh on investor sentiment

Global equity markets remained under pressure on Tuesday as investors adopted a risk-averse stance driven by concerns over stretched valuations—particularly in the artificial intelligence (AI) sector and shifting expectations around US monetary policy. US equities ended sharply lower on Tuesday, with the S&P 500 and Dow posting a fourth consecutive decline, down 0.80% and 1% respectively, while the Nasdaq slipped 1.10%. Markets pulled back portions of the recent artificial intelligence trade ahead of Nvidia’s results and stretched tech valuations came under renewed pressure after weeks of heavy, capex-related debt issuance. The sell-off was led by the mega-cap names, with Nvidia dropping -2.80%, Microsoft -2.70% lower, Amazon falling by -4.40% and Tesla decreasing by -1.90%, while Home Depot fell 6% after trimming its full-year profit guidance.

Asian markets mirrored the global downturn. Hong Kong’s Hang Seng Index dropped 1.70%, marking its sharpest daily fall since mid-October and closing at a two-week low of 25 930. The index recorded its third straight day of losses, pressured by broad-based sector declines and growing unease over delayed US data releases, including September’s employment figures. Investors across the region remained on edge ahead of Nvidia’s earnings release, which has become a critical sentiment driver for global tech markets. Japan’s Nikkei saw an even steeper fall, tumbling 3.20% to finish at 48 703. The index notched its third consecutive daily decline as local investors reacted to Wall Street’s overnight slump and opted to trim exposure to tech shares in anticipation of key US economic data and corporate results.

The risk-off tone carried into European trading, where equities sank to around one-month lows on Tuesday. Markets extended declines from previous sessions, mirroring the broader global pullback. The STOXX 50 slipped 1.90% to 5 540, while the STOXX 600 fell 1.80% to 561. The UK market also came under pressure, with the FTSE 100 dropping 1.40% to 9 543 — its lowest level since October and extending its losing streak to a fourth consecutive session as financial stocks led the declines. Losses were widespread across major Eurozone sectors. Banks were hit, with Santander, Intesa Sanpaolo and ING each dropping more than 3%. Consumer cyclicals and technology names also retreated, with Adidas, Ferrari, Adyen, and Infineon losing more than 2%. In contrast, Roche jumped 6.80% after positive late-stage trial data for its breast cancer pill, Giredestrant.

Commodities were not spared from the risk-off mood. Brent crude traded near $64 a barrel as worries about a growing supply glut overshadowed impending sanctions on Russian output. Expectations for increased production from both OPEC and non-OPEC producers, combined with slowing demand, weighed on prices.

Locally, the South African rand was relatively steady as domestic markets awaited key economic releases. By 17h30, the currency was trading at R17.19 to the US dollar, with investors looking ahead to October inflation figures and September retail sales due today. Focus will then turn to Thursday’s interest rate announcement, where economists polled by Reuters expect a 25-basis-point cut to 6.75%. The JSE closed 1.71% lower, in line with the broader global sell-off.