A global selloff in AI-linked stocks hit Asian, European and US indices on Friday after Democrats took control of the US Congress. Investors fear tighter scrutiny of AI data-centre spending, and the STOXX 600 erased its weekly gains.
European shares fell on Friday, with losses across the board as a global rout gathered steam and investors grappled with uncertainty over AI stocks. The pan-European STOXX 600 dropped 1% to 648.83 points by 0919 GMT, which left it down about 0.3% for the week.
Fears of curbs on AI spending drive the selloff
Fears that a Democrat-led Congress could seek curbs on AI data-centre spending added to concerns over weak returns, lofty valuations and debt-fueled investment. Susannah Streeter, chief investment strategist at Wealth Club, said falling stock portfolios would act as a real drag on consumer sentiment, according to Reuters.
Streeter also expects market volatility to persist until at least January, when there could be more clarity on the Democrats' approach to AI policy.
Asia and Wall Street take the sharpest hits
The damage was steeper elsewhere. Japan's Nikkei slumped 6%, its deepest one-day drop since April 2025, while Taiwan stocks closed down 4.5% and fell 12.2% for the week, the biggest weekly decline since 1991, according to LSEG data.
On Wall Street, the Nasdaq sank 5.5% and $3 trillion was wiped off S&P 500 firms. Christopher Forbes of CMC Markets said his firm had client margin calls.
Europe's smaller AI exposure limits the damage
The STOXX 600 was relatively less affected this week than its Asian and Wall Street peers because of its smaller exposure to AI stocks. Even so, media, healthcare and personal and household goods led declines, falling over 2% each, so traditional safe-haven sectors were not immune.
Some stocks gained. Clean energy shares rose, with Orsted up 2.7% and Nordex up 1.7%, and airlines Lufthansa and Air France KLM climbed 2.4% and 5%. Teleperformance went the other way and tanked 18% after cutting its full-year revenue growth outlook.
Sources: Reuters via Investing.com (Europe), Reuters via Investing.com (Asia)
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