Share prices in Asian and US markets have tumbled as concerns grow that the world’s largest economy could be headed towards a recession.
Data showed US manufacturing activity remains subdued, with investors now focussed now on key jobs figures due on Friday.
American chip giant Nvidia was hit particularly hard, slumping by almost 10% as optimism about the boom in artificial intelligence (AI) dampened.
Despite the sharp fall, Nvidia’s shares are still worth double their value a year ago.
Market watchers are now trying to second-guess how the Federal Reserve, the US central bank, will respond when it meets to decide interest rate policy next week.
“Growth concerns are dominating market moves,” Julia Lee at FTSE Russell told the BBC.
In New York on Tuesday, the S&P 500 index closed more than 2% lower, while the technology-heavy Nasdaq fell by over 3%.
Nasdaq-listed Nvidia fell by 9.5%, wiping $279bn (£212.9bn) off its stock market valuation.
Over the longer term however Nvidia shares are still worth nine times their price in November 2022, when the launch of ChatGPT set off the current bout of interest in AI, prompting a surge in demand for Nvidia’s chips.
Other US tech giants — including Alphabet, Apple and Microsoft — also saw their shares tumble on Tuesday.
On Wednesday morning, Japan’s Nikkei 225 was down 4.4%, South Korea’s Kospi was trading 3% lower and the Hang Seng in Hong Kong dropped by 1.3%.
Major Asian technology firms including TSMC, Samsung Electronics, SK Hynix and Tokyo Electron were sharply lower.
Asian markets have performed less strongly over the last year, with the Shanghai and Hong Kong indexes lower over the twelve months. Japan’s Nikkei is up 12% over the year, however.
“Concerns around global growth look to be hitting exporting countries in the region particularly hard,” Ms Lee added.
As well as next week’s interest rate decision in the US, investors will be waiting for Friday’s US jobs market report, to provide further signs on the direction the US economy is taking.
Swetha Ramachandran, fund manager for Artemis Investment Management in London, said Tuesday’s US share falls were a sign that investors were beginning to doubt the Federal Reserve would make a large cut in interest rates.
Nvidia’s slide was a matter of “expectations catching up with reality” for the AI giant, she told the BBC.
“[Nvidia] did report results last week where it alluded to a natural and expected deceleration in growth: from having delivered 122% growth in the second quarter it expects to deliver 80% growth in the third quarter,” she said.
The fall might also be a reaction to reports that the US Department of Justice had issued a subpoena, requiring the firm to give evidence over anti-trust issues, she added.
The Department of Justice declined to comment.
