UK shares dropped on Wednesday morning following falls in Asian and US markets as concerns grow about the world’s largest economy.

Data showed US manufacturing activity remains subdued, with investors now focussed now on US jobs figures due on Friday.

American chip giant Nvidia was hit particularly hard, slumping by almost 10% as optimism about the boom in artificial intelligence (AI) dampened.

Despite the sharp fall, Nvidia’s shares are still worth double their value a year ago.

The FTSE 100 index, which comprises the largest companies on the London Stock Exchange, dropped 0.55% by lunchtime, with major European indexes also down. Germany’s Dax fell 1.41%, France’s Cac 40 was down by almost 1%, and Spain’s Ibex was also lower, by 0.51%.

Market watchers are now trying to second-guess how the Federal Reserve, the US central bank, will respond when it meets to decide interest rate policy next week.

“Growth concerns are dominating market moves,” Julia Lee at FTSE Russell told the BBC.

In New York on Tuesday, the S&P 500 index closed more than 2% lower, while the technology-heavy Nasdaq fell by over 3%.

Nasdaq-listed Nvidia fell by 9.5%, wiping $279bn (£212.9bn) off its stock market valuation.

Over the longer term however Nvidia shares are still worth nine times their price in November 2022, when the launch of ChatGPT set off the current bout of interest in AI, prompting a surge in demand for Nvidia’s chips.

Other US tech giants — including Alphabet, Apple and Microsoft — also saw their shares tumble on Tuesday.

Japan’s Nikkei 225 ended Wednesday’s trading session 4.2% lower, while South Korea’s Kospi lost more than 3% and the Hang Seng in Hong Kong dropped 1.1%.

Major Asian technology firms including TSMC, Samsung Electronics, SK Hynix and Tokyo Electron were sharply lower.

Asian markets have performed less strongly over the last year, with the Shanghai and Hong Kong indexes lower over the twelve months. Japan’s Nikkei is up 12% over the year, however.

“Concerns around global growth look to be hitting exporting countries in the region particularly hard,” Ms Lee added.

As well as next week’s interest rate decision in the US, investors will be waiting for Friday’s US jobs market report, to provide further signs on the direction the US economy is taking.

Swetha Ramachandran, fund manager for Artemis Investment Management in London, said Tuesday’s US share falls were a sign that investors were beginning to doubt the Federal Reserve would make a large cut in interest rates.

Nvidia’s slide was a matter of “expectations catching up with reality” for the AI giant, she told the BBC.

“[Nvidia] did report results last week where it alluded to a natural and expected deceleration in growth: from having delivered 122% growth in the second quarter it expects to deliver 80% growth in the third quarter,” she said.

The fall might also be a reaction to reports that the US Department of Justice had issued a subpoena, requiring the firm to give evidence over anti-trust issues, she added.

However, Nvidia later said that it had not been subpoenaed.

The Department of Justice declined to comment.