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US stocks moved lower on Wednesday as trader sentiment took a downturn after a warning from artificial intelligent (AI) giant Nvidia (NVDA) that the US was limiting chip exports to China.
London’s FTSE (^FTSE) was retreating during the day, but made headway later in the afternoon following gains from mining and energy stocks.
The index was up 26.48 points, or 0.32%, to close at 8,275.6.
Germany’s Dax (^GDAXI) index also staged a recovery on Wednesday afternoon, gaining 0.27% at the end of the day. France’s Cac 40 (^FCHI) was treading water, closing 0.07% lower.
US stocks were declining when trading began on Tuesday, with the technology-focused Nasdaq (^IXIC) index tumbling about 2%, dragged lower by losses of around 7% for Nvidia.
By the time European markets closed, the S&P 500 (^GSPC) was down about 1.2%, and the Dow Jones (^DJI) was 0.5% lower.
Nvidia told investors on Tuesday evening that it is expecting to face a 5.5 billion US dollar (£4.2 billion) hit from charges relating to a new licence to ship its chips to China, including Hong Kong.
The company said it been informed by the US government that it needs a licence to export its H20 AI chip to China.
The requirement will be in place for the “indefinite future”, Nvidia said.
Tensions between the US and China have been escalating, with the world’s two largest economies steadily increasing tariffs on each other’s goods since Donald Trump raised tariffs on dozens of countries.
Russ Mould, investment director at AJ Bell (AJB.L), said the update from Nvidia “marks a new chapter in the escalating tit-for-tat between Washington and Beijing”.
He added: “The deteriorating relationship between the two countries means China’s better-than-expected GDP (gross domestic product) figures for the first quarter may not attract too much attention given they cover a period before the Trump administration unleashed its trade policy.”
Meanwhile, the price of Brent crude oil soared about 1.6% to 65.70 US dollars per barrel.
The pound was continuing to rise against the US dollar, and was up 0.1% to 1.324. However, sterling dropped about 0.8% against the euro, to 1.164.
In company news, shares in FTSE 100-listed Bunzl (BNZL.L) plummeted by more than a quarter after the distributor said it had seen weaker sales in its North American business, and flagged a “significant decline” in its adjusted operating profit.
The business, which has its largest market in the US, blamed a “more uncertain macro environment” following the swathe of new tariffs introduced by Mr Trump on goods entering the country.