Global markets show divergence amid Nvidia concerns

Shares of Nvidia experienced a significant drop of 8.6% in after-hours trading following reports that the company’s board convened late Wednesday to address issues related to CEO Jensen Huang. Huang has acknowledged a relationship with a businesswoman accused of sharing intelligence and advanced technology with China, prompting a company investigation and raising national security concerns. Despite this setback, Nvidia’s stock had previously risen by 2.9% on Wednesday.

The S&P 500 edged down 0.4%, while the Dow Jones Industrial Average remained nearly unchanged.

European markets demonstrated a more positive trend, with France’s CAC 40 increasing by 0.7% and the German DAX climbing to 26,939.92, a rise of 1.0%. The FTSE 100 in Britain also saw a gain, up 0.3% to 10,868.98.

In Asia, the Nikkei 225 in Japan decreased by 0.7% to 60,819.36. South Korea’s Kospi fell 0.6% to 5,342.73 after an initial positive start. Taiwan’s Taiex experienced a more substantial decline, losing 2.6%. Australia’s S&P/ASX 200 dropped slightly to 9,146.80. Hong Kong’s Hang Seng decreased by 1.3% to 24,008.55, and the Shanghai Composite fell 0.7% to 3,655.83.

Beyond the Nvidia situation, investors are expressing caution regarding the potential for a slowdown in the AI industry, questioning the return on substantial investments in the technology. Some analysts suggest that the recent dip in Nvidia’s share price might be attracting opportunistic buyers seeking a perceived discount, despite the uncertainty surrounding Huang’s future. “There is no credible way to put a precise revenue loss on his departure,” stated Ipek Ozkardeskaya, senior analyst at Swissquote. “Customers buy Nvidia’s computing power, software and networking ecosystem, and those advantages wouldn’t disappear with its CEO.”

U.S. crude benchmark rose 0.8% to US$87.26 a barrel, while Brent crude increased 0.8% to $93.53 a barrel. Brent crude has fluctuated between $72 and $120 since the conflict with Iran impacted prices.

Currency markets saw the U.S. dollar weaken to 159.64 Japanese yen, down from 159.79 yen. The euro was valued at $1.1095, slightly up from $1.1091.