“Gold is under pressure”Stock markets around the world are shaking – losses are spreading
The mood on the stock exchange is deteriorating, and the situation on the Frankfurt stock market is also declining. Meanwhile, a star investor gives up and closes his hedge fund.
The global stock market decline that started yesterday, Thursday, continues. There are two main reasons for this: high valuations of technology companies and increasing doubts about whether the US Federal Reserve will lower interest rates at its next meeting.
In Germany, the DAX fell below the 24,000-point mark again, and was down 1.7 percent at 23,626 points. The leading EuroStoxx 50 index fell 1.2 percent, while London’s FTSE fell 1.1 percent. Asian stock markets had previously followed the global sell-off on Thursday. A dark red opening appeared on the US stock exchanges.
“The euphoria regarding the end of the government shutdown in the US has completely disappeared, and now hopes of further rate cuts are waning,” concluded strategist Jürgen Molnar of broker RoboMarkets. Investors reduced their expectations for further easing of US monetary policy soon after Fed officials differed on the condition of the US economy.
“Questions about interest rates could keep stock markets in suspense in the coming weeks,” commented Thomas Altmann, portfolio manager at asset manager QC Partners. “As of now, the next Fed meeting is less predictable than it has been in the past.” Several US economic data reports will be presented in the coming weeks, which were delayed due to the partial shutdown by the authorities that ended on Wednesday. Some publications will also likely be canceled because the data required for those publications was never collected due to the shutdown
The new losses followed a sell-off on Wall Street led by artificial intelligence stocks. Warnings are mounting that market valuations have become disconnected from fundamentals.
Bitcoin is also losing money
On Wall Street, the benchmark Dow Jones stock index ended trading down 1.6 percent, while the technology-heavy Nasdaq fell 2.3 percent. The S&P 500 lost 1.7 percent. “It looks like investors are taking advantage of these AI-related stocks,” said Nomura Securities strategist Fumika Shimizu, citing concerns over their high valuations. Nvidia shares and other artificial intelligence (AI) heavyweights in particular have come under pressure as investors question their lofty valuations.
After the decline in prices on the stock market, the price of gold also fell. A troy ounce of gold fell nearly 3 percent to $4,024. “Gold is under pressure as positions are closed to meet margin calls due to stock market losses,” said Ricardo Evangelista, analyst at ActivTrades.
A similar thing also happened to Bitcoin. The price fell 2.4 percent to $96.386 and remained at its lowest level since May. Prices had fallen about 3 percent on Thursday.
In a sign of growing concerns about tech stock valuations, star investor Michael Burry is shutting down his hedge fund, Scion Asset Management. His fund records are often held up as clues to potential market bubbles and inflated valuations.
Among other things, hedge funds also rely on falling stock prices. Burry became famous for his bets on the US housing market before its collapse in 2008. His story was immortalized in the book “The Big Short” by Michael Lewis, which later became the basis for the Hollywood film of the same name. Recently he bet against AI heavyweights Palantir and Nvidia. “My assessment of the security’s value is current and has been inconsistent with the market for some time,” he wrote to fund investors in late October.
Burry recently argued that tech companies like Microsoft, Google, Oracle and Facebook parent Meta are investing billions of dollars in Nvidia chips and servers while quietly delaying depreciation plans to make profits look higher.
Between 2026 and 2028, these accounting decisions could understate the amount of depreciation by about $176 billion. This increases the reported profits of the entire industry, Burry said.
