Stock markets across Europe and Asia experienced significant declines on Friday, following a sharp drop in US technology stocks the previous day. The decline was triggered by market concerns stemming from the Democrats’ midterm election success. European indices showed substantial losses, with London’s FTSE 100 falling as much as 2.35% before recovering to close down 1% by day’s end. Germany’s Dax declined 2%, France’s Cac 40 dropped 0.8%, and Spain’s Ibex lost 0.6%.
The underlying driver of market weakness centered on concerns about artificial intelligence investment and datacenter infrastructure expansion. Market analysts noted that while the tech sector had driven recent gains, uncertainty about future returns on massive AI-related capital investments spooked investors. Asian markets suffered particularly heavy losses, with Japan’s Nikkei 225 sinking 6% and South Korea’s Kospi tumbling more than 6.5%. Chip manufacturers led the sell-off, with semiconductor memory maker SanDisk dropping 22% and hard drive manufacturer Western Digital falling 17%.
Wall Street’s volatility index surged more than 60% to levels not seen since the early weeks of the Iran conflict. However, conditions stabilized somewhat on Friday when US markets reopened, with technology stocks recovering and the Nasdaq closing up 1%. Economic data showing 165,000 new US jobs added in October and an unemployment rate of 4.1% provided some support for sentiment.
Despite the sharp declines, major indices retained year-to-date gains. The Nasdaq Composite remained up 6.35% since January, while the FTSE 100 had gained almost 7.5% for 2026. Market analysts offered mixed assessments of the selloff’s durability, with some viewing it as a temporary correction in the AI trade rather than a fundamental unwinding. The weakness also extended to commodity markets, with copper positioned for its largest weekly decline since March due to growing sensitivity to AI market sentiment and datacentre expansion expectations.
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