Global financial markets, particularly in Europe, are bracing for a turbulent trading week, with forecasts pointing to a sharp sell-off on Monday. This unease follows a historic plunge in precious metals prices and growing doubts about the sustainability of the artificial intelligence spending boom, casting a shadow of anxiety over investor sentiment worldwide.
European indicators are poised for a decline
According to data from IG, major European indices are expected to open with significant declines. The UK's FTSE 100 is forecast to open down 0.5%, while Germany's DAX could face a steeper drop of nearly 1%. France's CAC 40 and Italy's FTSE MIB are also expected to fall by around 0.8%, reflecting a prevailing sense of pessimism across the continent.
General context: A shake-up in safe havens and the technology sector
This decline didn't happen in a vacuum; it's the result of a confluence of several pressures. Last Friday, the metals markets experienced a sharp drop, with gold falling by about 9% and silver plummeting by 30% in its worst daily performance since 1980. Historically, gold and silver are considered safe havens for investors during times of economic uncertainty. This steep decline raises questions about market dynamics and could indicate widespread profit-taking or a shift in expectations regarding interest rates and the strength of the dollar.
On another front, the technology sector, which has been the main driver of the markets recently, is facing headwinds. All eyes on Wall Street are on Nvidia, the artificial intelligence chip giant, following reports of internal doubts surrounding its massive $100 billion investment in OpenAI. Any slowdown in AI investment could lead to a revaluation of companies that have experienced meteoric rises, threatening to destabilize the entire market.
Expected global impact
These negative movements are not limited to Europe. Asia-Pacific markets also saw declines during overnight trading, led by South Korean indices. US stock futures also fell, signaling a difficult start for Wall Street. Adding to this was the weekend sell-off in Bitcoin, underscoring the prevailing risk aversion among investors. The interconnectedness of global markets means that disruptions in a particular sector or geographic region can spread rapidly, creating a chain reaction that is difficult to contain. Analysts are closely watching whether this wave is merely a short-term correction or the beginning of a longer downward trend.
