Global markets took a sharp drop in mid-session, with no obvious trigger behind the move as stocks, crypto and metals all took a big dive. On Wall Street, it was the big tech that suffered the most during a sharp sell-off, causing the Nasdaq 100 to drop away from record levels with an intraday fall of nearly 2%, before markets bounced off their lows again. Investors have been reassessing the increasingly crowded AI trade, and recently scepticism has grown over whether the hundreds of billions being poured into artificial intelligence will actually deliver the returns markets have been pricing in. Microsoft took a double digit tumble in one of its worst single-day declines ever. Earlier today, a sharp sell-off in another big tech, SAP, caused the DAX to tumble. The sell-off in Microsoft shares reflects growing concern that it may take far longer than expected for AI investments to translate into meaningful profits. Meta, by contrast, offered some relief after issuing a solid outlook, helping to ease fears that spending plans across the sector are spiralling out of control. Apple reports later today, and its guidance could prove pivotal in shaping short-term Nasdaq 100 forecast.
Not so Magnificent Seven
The so-called “Magnificent Seven” have dominated market performance for most of the past few years, but that narrative is clearly being challenged in recent months, as the one-way bet on AI leadership is now starting to look overcrowded. There is now some fear creeping into investors’ minds that the AI theme may not be as immediately lucrative as hoped a few months or years ago. Still, all is not lost and given the fact the Nasdaq is only easing back from record levels is a clear sign that it is far too early to talk about the peak in tech.
What is Bitcoin telling us?
However, the overall backdrop is not looking very comfortable right now. Bitcoin, which has been rising and falling with the tech sector, has been out of favour for a few months now. Today, it slipped back below $85,000, adding to the sense that speculative risk appetite is cooling. Meanwhile, commodities have seen violent swings, with oil surging on geopolitical fears while precious metals suffered a dramatic reversal, with silver plunging $14 from its earlier record high, before bounces back around $9 at the time of writing.
Could the US strike Iran?
Fears that there could be another conflict in the Middle East is behind some of these moves. Donald Trump warned Iran to strike a nuclear deal or face potential military action, reviving concerns about supply risks from the Middle East. This may be why gold has risen as much as $5600 at its peak today, before that tumble. At its worst point, gold lost over $2 trillion in market value, while silver plunged more than 12% in just over an hour, before both metals bounced back. Volatility has gone through the roof. What stands out is the lack of a clear fundamental catalyst behind the move, underlining how speculative and fragile current market conditions remain.
Markets in reassessment mode
Taken together, the tech rout, commodity whiplash, and crypto weakness suggest investors are entering a broader phase of reassessment. The AI trade is being repriced, safe-haven assets are losing momentum after crowded positioning, and geopolitical risk remains a persistent undercurrent.
For now, the Nasdaq 100 remains technically intact, but sentiment has clearly shifted from blind optimism to cautious re-evaluation. In that environment, volatility is likely to stay elevated, with markets struggling to regain a clear directional bias until there is more clarity on whether the massive AI investment cycle can genuinely deliver the returns investors are expecting. Still, no major support levels are taken out, although that 25800-25850 area on our US Tech 100 (derived from the underlying Nasdaq index futures) should have held on the re-test. So, we have seen the first glimpse of a bearish move. Next support is seen between 25,200-25,290. If the index breaks below that area, then things will get spicier.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
