Global Stock Slump: AI and Labor Data Shake Markets

Global stock markets experienced a downturn, primarily driven by semiconductor shares, following concerns over excess AI capacity and weak U.S. payroll data. The dollar's value dropped, easing expectations of a Federal Reserve interest rate hike. In contrast, European stocks climbed amid reduced rate hike predictions.

Global stock markets took a hit on Thursday, significantly impacted by semiconductor shares. The decline was prompted by concerns about the potential for overcapacity in AI as Meta Platforms announced plans to sell computing power. The U.S. semiconductor index plummeted over 6%, sharply affecting worldwide indices.

The latest U.S. labor data revealed surprisingly weak job growth, with only 57,000 jobs added in June against expectations of 110,000. The revision of payroll gains for previous months points toward a cooling labor market, dampening hopes for an imminent interest rate increase by the Federal Reserve.

The dollar weakened against its peers, resulting in a 0.52% drop in the dollar index, while emerging market currencies gained strength. Oil prices remained stable amid discussions between Iran and the U.S. on resolving the Gulf shipping disruptions. European markets, meanwhile, maintained an upward trend in the face of anticipated fewer interest rate hikes.