Global stock markets extended losses on Tuesday, November 18, 2025, as investor anxiety intensifies over sky-high valuations in the technology sector, particularly around companies central to the artificial intelligence boom. The sell-off in Asian and European markets followed a downturn on Wall Street, with all eyes now turning to the upcoming earnings report from AI-chip giant Nvidia and a crucial, long-delayed US jobs report that will inform future interest rate decisions.

Asian stock indices broadly declined, tracking the negative sentiment from the United States. Japan's Nikkei 225, Hong Kong's Hang Seng, and China's CSI 300 all posted significant losses as the market grapples with fears that the record-breaking rally in AI-related stocks may have created an unsustainable bubble. The MSCI global stock gauge is currently trading at a one-month low, underscoring the widespread uncertainty.

Nvidia Earnings: A Litmus Test for the AI Boom

The primary focus for investors this week is the third-quarter earnings report from Nvidia, scheduled for release after markets close on Wednesday, November 19, 2025 (EAT). The company has become a bellwether for the entire AI industry, and its results are seen as a critical test of whether the massive corporate spending on AI infrastructure can be sustained.

Analysts have set incredibly high expectations, with consensus forecasts projecting year-over-year revenue growth of over 55% to around $54-$55 billion and a similar surge in earnings per share. The performance of its Data Center division, which supplies the chips powering AI models, is expected to account for the vast majority of this revenue. However, there is growing concern that the market has priced in perfection, leaving little room for disappointment. Options markets are implying a potential post-earnings stock price swing of 7% to 8.5% in either direction, highlighting the significant volatility anticipated.

“While we should expect an eventual reckoning for blindly throwing trillions of dollars at AI capital expenditures with no clear path to profitability, markets are unlikely to tip over while the Fed is still in easing mode and the economy is still strong,” noted Dennis Follmer at Montis Financial. Nonetheless, any sign of slowing growth or cautious forward guidance from Nvidia could trigger a broader market correction.

US Jobs Data and Fed Policy in Focus

Compounding the market's nervousness is uncertainty surrounding the direction of US monetary policy. The release of the long-delayed September jobs report, expected on Thursday, November 20, will be a key data point for the US Federal Reserve. The report was held up by a recent US government shutdown. Economists forecast a soft report, which could influence the Fed's decision at its December meeting.

Federal Reserve officials appear divided. Governor Christopher Waller has argued that a weak labor market justifies another interest rate cut in December to stimulate the economy. However, minutes from the October meeting are expected to reflect a more hawkish tone, with Chair Jerome Powell having previously stated that a December cut is not a foregone conclusion. This division has left investors uncertain, with market odds of a December rate cut falling dramatically in recent weeks.

Implications for Kenya and East Africa

For Kenya, decisions made by the US Federal Reserve can have significant economic consequences. A cut in US interest rates typically weakens the US dollar, which could provide a boost to the Kenyan Shilling. A stronger shilling would lower the cost of imports—such as fuel, machinery, and food—potentially helping to curb domestic inflation. Furthermore, it would reduce the burden of servicing Kenya's dollar-denominated external debt.

Lower US interest rates also make American assets less attractive, which can encourage foreign investors to seek higher yields in emerging markets like Kenya. This could stimulate capital inflows into the Nairobi Securities Exchange (NSE), boosting local equities and bonds. The NSE has had a strong performance in 2025, with its market capitalization surpassing the KSh 3 trillion mark in early November and the benchmark NSE All Share Index (NASI) showing a year-to-date gain of over 52% as of Monday, November 17. A continued bull run, however, could be influenced by global macroeconomic shifts.

Conversely, if the Fed maintains higher interest rates, the US dollar could remain strong, putting continued pressure on the Shilling and increasing import costs and debt servicing obligations for Kenya. As global investors navigate the current volatility, the coming days will be critical in setting the market's direction for the remainder of the year.