Questions over artificial intelligence boom lead to global market selloff • FRANCE 24 English

On to business now. Shan Pelgrant is here. He’s going to start uh with a check on the markets. They’re undergoing, aren’t they, Charlotte, one of their worst routes this year. Uh we haven’t seen this kind of market selloff uh since Donald Trump upended global trade back in April by announcing his uh reciprocal tariffs on virtually every country on the planet. The momentum uh we saw at the close on Wall Street on Monday bleeding into markets in Europe. this Tuesday as we can see the open on the major European borces here with the DAX and Frankfurt down almost one and a half% lower and we saw a similar trend for Asia-Pacific stocks as well this Tuesday uh the Nikkay index in Japan uh falling more than 3% as well as the Cosby index in South Korea. It’s not just stocks that are being hit. It’s also uh cryptocurrencies. Bitcoin has now erased all the gains it made this year at one point even dropping below the $90,000 of Bitcoin mark. Uh now above that now and finally also gold pulling back lower towards the $4,000 an ounce mark after an incredible rally this year. So what’s behind this change in sentiment then sh why are investors selling like this? So there are two parts to this and the first has to do with artificial intelligence. A rally in tech stocks, which are some of the biggest stocks uh out there, has been what’s been driving the markets up over the past couple of years. A promise here being that AI will revolutionize the economy, driving productivity up, meaning more output for a fraction of the cost. And this has led to a spending spree in building up the infrastructure necessary to power that AI uh revolution. meaning data centers and chips that would be able to handle all the computations required by large language models like OpenAI’s Chad GPT and other AI applications. That’s why we’ve recently seen blockbuster deals re uh for for instance a tie between Oracle and OpenAI for $300 billion or chipmaker Nvidia and OpenAI for hundred billion and so many more. US Bank Morgan Stanley estimates that sp that spending spree will total nearly $3 trillion uh by 2028 with about half coming from big tech’s own cash flow and the rest from other sources of financing including private credit. So non-bank lending and that’s what’s a source of concern for investors. All this money is being spent but will there be returns and is that amount of debt sustainable? Uh, for reference, OpenAI has so far not turned a profit and says it won’t until 2029. That’s what’s driving tech stocks like chipmaker Nvidia down, especially after uh billionaire Peter Theel’s hedge fund and Japanese conglomerate SoftBank have sold their entire entire stakes in the chipmaking company in recent days. All this happening ahead of Nvidia publishing its third quarter earnings this Wednesday. That’s one part. What’s the other part of the story then? Well, the other part uh of the story has to do with economic growth in the US, the world’s biggest economy. There have been concerns over persistent inflation there, but also over slow job growth. And we’ve been in a bit of an information blackout recently with the government shutdown, but that’s now ended. And this week, delayed September jobs data will be published. And if job growth has again shown to be on a downward trajectory, then it could complicate the Federal Reserve’s rate cutting path, which investors were previously betting on. Well, meanwhile, Donald Trump has been talking up his efforts to bring down prices for US consumers. Affordability has become the latest political buzzword in American politics after Democrats like New York Mayor Elect Zoran Mandani swept to victory in off-year election races. Trump insisting that his policies too are easing financial pressure on consumers, though many analysts say that his tariffs especially are likely having the opposite effect. Brian Quinn has a story. An affordability pitch that could be a tough cell. At a gathering of McDonald’s franchise owners Monday, US President Donald Trump addressed what has become a potent political weapon in the hands of his opponents. The sky-high cost of living in America. I will not rest until you are richer, stronger, more successful, happier, and affordable is should be our word, not theirs. Because Trump retook the White House in 2024 in large part on promises to rein in costs for bleaguered US consumers. But his signature economic policy, hefty tariffs on imported goods, has almost certainly pushed retail prices higher as US businesses pass along their added costs. The president has consistently denied that his tariffs are an inflationary driver. Last week though, he reversed course, eliminating tariffs on more than 200 imported food items, including coffee and bananas. Trump has also floated the idea of sending $2,000 checks to low and middle inome Americans funded by tariff revenues, a plan many analysts say would also likely fuel inflation. Meanwhile, warning signs are flashing in the US consumer economy. While Trump has focused on lower gasoline prices, monthly home energy bills have risen by 12% annually, in part due to the huge electricity demands of new AI data centers. Past due balances on utility bills have jumped by nearly 10%. Missed payments on subprime car loans are also on the rise, and worse could be yet to come. Millions of Americans are about to see their health insurance premiums double or even triple in the new year with the expiration of federal subsidies for Obamacare plans. Brian Quinn reporting there. Finally, we’re going to end with the world’s catchiest and most annoying stock market debut. I advise you probably to put your fingers in your ears. Baby Shark, doo doo doo doo doo doo. Baby Shark, doo doo doo doo doo doo. Baby Shark, doo doo doo doo doo doo. Baby Shark, Mommy Shark, doo doo. Hi again. It’s me, your business editor. I’m here to ruin your day and maybe even your week with history’s catchiest jingle. We’re bringing back the 2016 kids hit, Baby Shark, because the educational company behind it, Ping Pong, made its market debut in Soul this Tuesday, and it saw its shares trading 60% above its IPO price. Uh, as a reminder, Baby Shark is the most watched video on YouTube with over 16 billion views. Stuart, thank you so much for that. Sh. You were energized by that, weren’t you? Sh on the ground with the business.

European and Asian equities traded lower this Tuesday, following in the footsteps of Wall Street, as doubts rise as to whether the tech sector’s huge investments in artificial intelligence will pay off. Also in this edition: Donald Trump tries to convince American voters he is working to make life more affordable for them. Plus the company behind the 2016 mega-hit “Baby Shark”, Pinkfong, debuts on Seoul’s stock market.
##Markets ##AI ##Bubble

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33 comments

  2. Down 1.5^% on a massively inflated market and it's being pushes as a "selloff." It's hard to tell if this is incompetence, ignorance, or just part of the perpetual dumbing-down of corporate newsmedia.

  4. Productivity for who?

    As soon as 20% of people gets layedoff they will get out of AI economy and make their own new economy which will become the real mainstream economy

  6. National Strike November 25th NO work, NO, buy, FREEZE the economy until the kid diddler is out of office. and the big ugly Bill is rescinded. America does NOT stand with trumpedophile. Americans can NO longer elect REPUBLICANS

  8. the rest of the world needs to prepare itself for the reality that the usa government has been artificially propping up the stock market for years – and usa citizens need to prepare themselves for the government to claim that their pensions were 'lost in the crash' – when in fact the government stole its citizens pension and ssi money ..

  12. What the West doesn't talk about…..AI will increase productivity 😂….what exactly does the US and Europe produce??….China produces the vast majority of everything and will use their own AI…..So what exactly will western AI companies do and for whom?😂😂

  16. Western nations,who btw produce or manufacture little will increase productivity of what using AI…???…maybe for warfare or entertainment….China manufacturers everything and will use their own AI…. nobody outside of the west wants to use anything of their's, whenever possible!!!?..So it seems that the future value of American AI companies might be severely over estimated.

  17. Bitcoin id a ponzi scheme ai is a double triple ponzi scheme with people savings supporting this sht with the good favor of governments wtf do you think is going to happen

  19. The AI Industry is a Domain only of USA,,,And USA spending $Trillions on Investment on AI,,,Can Europe (EU) spend/Risk $Trillions of Investment on AI if They dont have got The Leading Tech As USA??? ;))

  20. The world financial markets are full of speculation.
    They will choose a theme and roll with it.
    AI is great and have a good future …….but should it boost the stock mart or economy by like tens of trillions…?
    Bitcoin is for criminal activities and it is worth $ 1 trillion…?

  21. AI data centers need to pay all costs for electricity infrastructure and they must Not be allowed to install Fuel powered electric generator on their site, this will create massive noise and Heat that will destroy the lives people living near Date Center!
    Do you want Giant Metal Power Towers criss crossing your City.
    If needed for National Security Add a National Infrastructure Tax on Business Electric bills nationwide (Not Residential) !

  22. How can you Trust the Data Centers being Built, when they Hide their Water, Electric and other Infrastructure Requirements in Redacted NDA Agreements. Some of these agreements Do Not even Disclose the Owners of the Data Centers.
    (NDA Non Disclosure Agreement)

    AI chips are obsolete after 2 years.

  25. All those data centers cost $10,000 from every american. Are they going to give YOU that return? Or just some billionaire?

  26. Imagine it will be Trump that causes another great depression. The bigger problem is that all pensions are in the private market. If the stock market tanks for real, there will be blood.

  29. Yep sounds like Russia's economy is ready to collapse, oh wait sorry I hear that so often I just misheard listening to this story

Comments are closed.