FTSE hits record high as gold and oil tumble

Thanks for joining me. Stocks, gold and oil have plunged in a global market rout driven by fears about AI spending and the outlook for interest rates.

Asian markets were pummelled and Wall Street was expected to open lower as a sell-off in precious metals fuelled a downturn across the world.

Gold was down as much as 7pc to nearly $4,400 an ounce, less than a week after hitting a record high close to $5,600. Silver plummeted by as much as 14pc to less than $72, having tipped above $120 for the first time last week. Oil was also down around 5pc to less than $66 a barrel.

Tim Waterer, chief market analyst at KCM Trade, said: “Traders are unnerved by the market tumult witnessed on Friday in precious metals.”

Gold and silver sold off sharply at the end of last week as a string of concerns swept the market, from Donald Trump’s trade war to the latest batch of tech earnings. 

There were also questions over the outlook for US interest rates after President Trump nominated a Kevin Warsh to be the next chairman of the Federal Reserve.

Trading was briefly halted on South Korea’s benchmark Kospi stock index, which plunged by more than 5pc as tech giants SK Hynix and Samsung fell by more than 8pc and 5pc, respectively.

Japan’s Nikkei 225, also home to several big-name tech companies, shed more than 1pc while Taiwan’s stock exchange – where chip giant TSMC is listed – lost more than 2pc. 

It followed losses on Wall Street on Friday in the wake of concerns about Microsoft’s huge spending on AI.

The tech giant resumed its downturn on Friday after falling more than 10pc on Thursday, which had wiped $357bn (£260bn) off its valuation in the second largest downturn in stock market history in a single day.

Stephen Innes of SPI Asset Management said the sell-off was “reflecting AI mega-cap bubble risk, in a familiar Monday morning echo of Wall Street’s late-week loss of balance”. Here is what you need to know.

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What happened overnight

Asian shares, gold, silver and oil plunged in a global market rout over worries about the future for US interest rates and an artificial intelligence bubble.

Heavy selling swept trading desks after Donald Trump announced his nominee to be the next Federal Reserve chairman, as the market remained concerned over a possible bubble in AI.

South Korea’s exchange, which is heavily influenced by tech-related developments, briefly suspended trading as its benchmark Kospi dropped 5.3pc to 4,949.67. Samsung gave up 6.3pc, while chip maker SK Hynix sank 8.7pc.

The Kospi has been forging records for weeks as big tech companies piggybacked on the AI craze with deals with major players like chip maker Nvidia and OpenAI.

Markets also took a hit as investors considered how Kevin Warsh, Trump’s new nominee to lead the Federal Reserve, might handle interest rates. The future for the S&P 500 on Wall Street sank 1.2pc% while that for the Dow Jones Industrial Average fell 0.9pc.

A fear in financial markets has been that the Fed will lose some of its independence because of Trump. That fear in turn helped catapult the price of gold and weaken the U.S. dollar’s value over the last year.

Early Monday, the price of gold fell 5.8pc, while silver dropped 12.3pc. Both plunged Friday as record runs in precious metals markets ground to a halt.

Oil was also hit, with Brent crude falling 4.5pc to $66 a barrel.

On Friday, the S&P 500 dropped 0.4pc to 6,930.03. The Dow lost 0.4pc to 48,892.47 and the Nasdaq Composite lost 0.9pc to 23,461.82.