The FTSE 100 was swept up in investor fears on Tuesday morning after the boss of Google gave a damming warning over the consequences of a bursting AI bubble.
London’s blue-chip index fell over one per cent as markets opened before levelling off at a 0.9 per cent loss at 9,591.40.
The dramatic falls come just days after the City had hoped to see the index race past the 10,000 mark after a week of consecutive record highs.
But flaring jitters have continued to weigh on the FTSE sparking sell-offs across the globe.
Leading the fallers was miners Fresnillo and Anglo American at five and four per cent respectively. This came as the price of gold fell to $4,042.38 – down 2.4 per cent for the week.
UK banks were also caught in the sell-off with Barclays falling 2.7 per cent to 399.85p and Lloyds two per cent to 88.89p.
Europe was swimming in a sea of red on Tuesday, with Germany’s DAX down over one per cent, the Cac 40 in Paris 1.2 per cent and Amsterdam’s AEX 1.3 per cent.
Over on Wall Street, the Dow Jones dropped 1.2 per cent in Monday’s trading session, whilst the S&P 500 and tech-heavy Nasdaq made respective 0.9 and 0.8 per cent losses.
The renewed fears this morning came as the head of Alphabet, Google’s parent firm, Sundar Pichai told the BBC “no company is going to be immune, including us” if the AI bubble bursts.
Pichai said: “We can look back at the internet right now. There was clearly a lot of excess investment, but none of us would question whether the internet was profound”.
“I expect AI to be the same. So I think it’s both rational and there are elements of irrationality through a moment like this.”
Investors not choosy in sell-off
Chris Beauchamp, chief market analyst at IG, told City AM the FTSE was a “victim of the broad global selloff”.
“If this is the beginning of the next bear market, then it is the most predicted bear market in history.
“In reality, this is an overdue dose of volatility, one that comes just weeks after global indices were sitting at record highs.”
Beauchamp added the softer weighing of tech stocks on the index had “insulated it to a degree” but added “investors are never choosy in a selloff”.
Chipmaker Nvidia will release an earnings update on Wednesday, which investors have looked to as a key temperature check for the AI ecosystem.
The firm lost near two per cent in Monday trading as bubble fears continued. It followed AI-related firms losing over £750bn in market value in the space of a week at the beginning of this month.
Top financial heavyweights have weighed in on the soaring valuations of stocks over the last month.
The Bank of England warned of the potential for a “sharp correction” in global markets due to the “stretched” stock valuations from the artificial intelligence (AI) boom.
America’s most influential banker and JP Morgan boss Jamie Dimon described himself as “far more worried than others” about a serious market correction within the next six months to two years.