European and Asian equity markets ended trading down on Wednesday as concerns over the impact of chip restrictions on Nvidia NVDA proved contagious.
The Stoxx Europe 600 index finished down 0.19% at close as investors reacted negatively to news that Nvidia’s export restrictions could cost it as much as $5.5 billion. Shares in the company were down 7.46% at close of UK trading. The negative sentiment proved contagious for Dutch semiconductor equipment company ASML ASML, whose stock was down -5.19% at the end of the trading day.
On the US markets, the S&P 500 opened down -0.95% while the technology-heavy Nasdaq-100 index opened down -1.87%, reflecting fragile sentiment. At close of play in the UK the S&P was down 1.22%, while the Nasdaq-100 was down 2.02%.
“Today there is a renewed focus on trade tensions and the consequences of tariffs on supply chains and company earnings,” says Nicolo Bragazza, associate portfolio manager at Morningstar Investment Management.
“Additionally, as per the White House’s statement, tariffs on China are now 245%. These fears have been also reinvigorated by ASML’s net bookings miss and by the company mentioning increasing uncertainty regarding tariffs and the broader macroeconomic landscape.”
ASML Holding Stock Price
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After a negative start to trading, the UK’s FTSE 100 index ended the trading day in the green at 0.32% amid positive inflation news for the month of March. According to the Office For National Statistics, the UK consumer prices index rose 2.6% in the 12 months to March 2025. This was lower than the 2.8% recorded in February and below the market consensus of a 2.7% rise.
Despite distribution company Bunzl BNZL weighing on the index after a full-year profit warning with a 25.60% stock price fall, the blue-chip index was led higher by Endeavour Mining EDV and Shell SHEL, which ended the day 6.43% and 2.66% higher, respectively.
On the FTSE 250, stocks finished flat at 0.011%, led marginally downwards by Molten Ventures GROW, Oxford Nanopore Technologies ONT, and Ocado OCDO, which fell -6.55%, -5.84%, and -4.84%, respectively.
In currency markets the US dollar continued its fall against the Euro, falling 0.33% over the last 12 hours. $1 now trades at €0.879241. The yield on the 30-year US Treasury note was roughly steady.
“Despite the dollar sell-off and renewed risk aversion, the US Treasuries bond market so far is trading as you’d expect with yields lower, although the 30-year yield is close to unchanged suggesting still fragile sentiment,” says Derek Halpenny, head of research, global markets EMEA & international securities at MUFG.
“Efforts have been made to shore up confidence in the bond market. Yesterday’s comments from US Treasury Secretary Scott Bessent may have helped.
“Bessent stated that the Treasury has ‘a big toolkit that we can roll out’ such as restarting buyback programs buying up older less-liquid off the run bonds to help liquidity and improve market-making conditions.”
Fair Value Estimate Lowered For Nvidia Stock
In the wake of the latest news on Nvidia, Morningstar analysts have lowered their fair value estimate for the company’s stock to $125 from $130, reflecting significantly lower China revenue.
“China has shrunk to about 10% of Nvidia’s revenue from 20%, and we now expect it to go to close to zero and we don’t foresee a turnaround any time soon,” says Morningstar equity strategist Brian Colello.
“Tariffs and geopolitical tensions remain a near-term and long-term concern for Nvidia and other chipmakers, while the future of AI expansion isn’t crystal clear either. These factors, among others, underpin our very high uncertainty rating.”
Nvidia Stock Price
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What Could Happen Next?
Wednesday’s renewed selloff and fresh inflation data places renewed pressure on central banks to cut rates—and particularly for the Bank of England.
“Further inflation concerns remain from the impact of president Trump’s tariffs,” says Nathaniel Casey, investment strategist at Evelyn Partners.
“If these do persist even at a rate of 10% then this would likely put upward pressure on inflation. However, the recent US growth concerns have put further downward pressure on the price of oil, which should continue to add some downward inflationary pressure over the coming prints, potentially mitigating some impact we could see from tariffs.
“While the BoE is yet to deliver an interest rate cut this year, we expect the growth risks will outweigh the inflation concerns and the bank will soon cautiously resume their cutting cycle. Markets currently expect the next rate cut to be delivered at their next meeting in May.”
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
