Global markets in freefall: A bloodbath across stocks, commodities, and cryptos
A river of red swept through global stock markets as Asian indices followed Europe and the US into sharp declines on Wednesday morning. US futures were also trading lower, signalling deepening investor anxiety.
Although Indian markets were closed for a holiday, the Gift City derivatives trade painted a bleak picture, with Nifty futures plunging sharply. Beyond equities, cryptocurrencies, industrial metals, and crude oil also slipped, while fears of an impending global recession added fuel to the sell-off.
AI boom becomes a burden
Analysts have warned that the wave of investments pouring into the artificial intelligence (AI) sector could soon turn into a liability. With the American market hovering at record highs for months without a correction, experts believe a downturn is overdue. The S&P 500 currently trades at a price-to-earnings ratio of 23 — its highest since 2000 — prompting many to caution that a market correction is inevitable.
Goldman Sachs CEO David Solomon, Morgan Stanley’s Ted Pick, and Ameriprise’s Anthony Saglimbene all predicted a 10–15% correction, describing it as “healthy” after months of relentless gains.
HSBC CEO Georges Elhedery added that the massive investment in AI lacks matching revenue potential. McKinsey estimates that building data centres and powering them could require an investment of around $7 trillion by 2030. General Atlantic chairman William Ford suggested that AI may take one or two decades to deliver adequate returns.
Global markets
Amid talk that the AI rally is little more than a bubble, major tech stocks tumbled on Tuesday. The tech-heavy Nasdaq index fell over 2%, while the S&P 500 slipped more than 1%, and the Dow Jones dropped 0.53%.
Shares of Palantir, despite reporting stronger-than-expected earnings, plunged 8% and fell another 2.5% in after-hours trading. Nvidia, Oracle, and AMD each declined around 4%, while Amazon fell 2%. IBM also announced it would lay off thousands of workers in the fourth quarter, further dampening sentiment.
At close, the Dow Jones index lost 251.44 points (0.53%) to 47,085.24. The S&P 500 fell 80.42 points (1.17%) to 6,771.55, and the Nasdaq Composite dropped 486.09 points (2.04%) to 23,348.64. Early Wednesday futures showed further declines: Dow down 0.28%, S&P down 0.70%, and Nasdaq down 1.05%.
Asian markets opened deep in the red. South Korea’s KOSPI index slumped 6%, Japan’s Nikkei fell 4.3%, Hong Kong dropped 1.4%, and China’s benchmark slipped 0.7%. The panic largely stemmed from fears surrounding the sustainability of AI-driven valuations.
European markets closed lower on Tuesday as corporate earnings guided investor mood. The weakening of the euro and pound against the dollar also added pressure.
Indian market
Indian equities continued their downward trajectory on Tuesday, with all major sectors showing weakness. Mid- and small-cap stocks, which had recently rallied, fell sharply. Except for consumer durables, every sector ended in the red — metals, IT, auto, realty, and FMCG led the fall.
Nifty closed 165.70 points lower (0.64%) at 25,597.65, while Sensex dropped 519.34 points (0.62%) to 83,459.15. Bank Nifty slipped 274.40 points (0.47%) to 57,827.05. Midcap 100 fell 0.42% to 60,037.20, and Smallcap 100 declined 0.82% to 18,360.90.
Market breadth was negative: 1,537 BSE shares advanced while 2,637 declined. On NSE, 1,032 rose and 2,062 fell. Foreign investors continued to sell, offloading shares worth ₹1,067.01 crore, while domestic funds purchased stocks worth ₹1,202.90 crore.
Gold and silver fall
Gold prices tumbled on Tuesday as the dollar index climbed above 100. Spot gold fell 1.75% to $3,933.10 per ounce before recovering slightly to $3,940. In Kerala, the 22-carat sovereign gold price dropped ₹520 to ₹89,800 per eight grams.
Silver also weakened, closing at $47.08 per ounce after touching a low of $46.98. Early Wednesday trade saw it dip again to $46.52 before inching up to $46.70. Platinum traded at $1,527, palladium at $1,393, and rhodium at $7,780.
Except for zinc, all major industrial metals declined. Copper fell 2.5% to $10,600.35 per tonne, aluminium dropped 1.77% to $2,854.85, while lead, nickel, and tin also declined. Rubber prices edged up 0.29% to 171 cents per kg, cocoa rose 0.75% to $6,586.57 per tonne, coffee slipped 0.25%, and tea remained unchanged. Palm oil prices dropped 0.12%.
Dollar holds firm, rupee strengthens
The dollar index closed Tuesday at 100.22 before easing to 100.13 on Wednesday morning. The euro fell to $1.1494, the pound to $1.3021, while the yen weakened to 153.03 per dollar.
US 10-year bond yields eased to 4.054% as prices climbed. The Indian rupee showed strength, appreciating by 12 paise to close at ₹88.66 per dollar, helped by strong RBI intervention.
China’s yuan slipped to 7.13 against the dollar.
Cryptocurrency crash
Cryptocurrencies suffered heavy losses as investors fled riskier assets. Bitcoin fell below the $100,000 mark twice within 24 hours, hitting $98,921 at one point and trading below $100,700 early Wednesday. Ethereum dropped to $3,056.92 before rebounding above $3,250, while Solana plunged 10% to $152.
