European shares join a global sell-off as AI spending fears rattle Wall Street and Asian markets
European shares fell sharply on Friday as a global sell-off fueled by concerns over artificial intelligence stocks spread from Wall Street to Asia and Europe.
The pan-European STOXX 600 index dropped 1.6% in early trading, wiping out its gains for the week. Most major European markets fell more than 1%, with media, healthcare and retail stocks leading the declines. European markets had previously weathered the week's turbulence better than their Asian and US counterparts because of their smaller exposure to AI stocks.
Asian markets plunge
Earlier, Japanese and South Korean shares tumbled after a massive selloff in tech stocks on Wall Street the previous day. Tokyo's benchmark Nikkei 225 index fell 5.5% in early trade, while Seoul's tech-heavy Kospi index slid as much as 8.8%, triggering a circuit breaker which suspended trading for 20 minutes. Taiwan's benchmark TAIEX index was also down more than 8%.
Asian tech giants including Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) have borne the brunt of the artificial intelligence-related selloff. Samsung plunged nearly 10% while SK Hynix slid over 11%.
Chip-related shares in Japan also took a beating, with Tokyo Electron stock trading down around 9% and Kioxia shedding 13%.
US election impact
Fears of curbs on AI data-center spending have added to investors' concerns after Democrats won control of both chambers of the US Congress. On Thursday, US markets were hammered by a sharp retreat in tech stocks, particularly those involved in the buildout of artificial intelligence infrastructure like data centers.
The tech-heavy Nasdaq fell 5.52% and shed as much as $2.5 trillion (roughly €2.23 trillion) in market value, while the broader S&P 500 index plunged 4.4%. The rout occurred as investors grow increasingly anxious about the colossal AI spending plans and whether they will eventually produce commensurate profits.
A number of Democratic governors-elect campaigned on slowing artificial intelligence development and promised to stop or pause the construction of data centers amid growing public opposition to such projects.
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