European shares fall as global AI rout gathers pace

By Reuters News

- European shares opened lower on Friday, with losses across the board as a global market rout gathered steam, capping a painful week as investors grappled with uncertainty over AI stocks after Democrats took control of the US Congress.

The pan-European STOXX 600 index .STOXX dropped 1.6% to 644.72 points by 0810 GMT, with benchmarks in most major regional markets also lower by more than 1% each. Friday's losses wiped out its gains for the week, and it is down about 0.2%.

The STOXX 600 index was relatively less impacted this week than its Asian and Wall Street peers, given the European index's smaller exposure to AI stocks.

Media .SXMP, healthcare .SXDP and retail .SXRP led broad-based declines, falling over 2% each.

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.

A slowdown in AI spending could weigh on the global economy that has been propped up by Big Tech investments.

Tech stocks such as Siltronic WAFGn.DE lost 2% and ASMI ASMI.AS lost 1.3%, while AI equipment makers such as Schneider Electric SCHN.PA and Siemens Energy were marginally lower.

On the earnings front, Teleperformance TEPRF.PA tanked 18% after cutting its full-year revenue growth outlook after weakness in the outsourcing firm's trust and safety business more than offset growth in its AI-powered and back-office services.

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