Global Markets | European shares stumble at end of best month since June on AI worries

European stock markets slumped on Friday as a global tech sell-off dragged down shares, marking the end of a notably strong month. The pan-European STOXX 600 index fell 0.36% to 646.75 points, despite setting a monthly record since June. Concerns about the high costs of building AI infrastructure, following weaker-than-expected results from Amazon and Intel in the US, led to a retreat from technology stocks worldwide.

Senior market analyst Daniela Hathorn noted that while strong AI demand remains robust, it's no longer sufficient on its own. The European technology sector index plunged 2.75% for its worst day since July 7, spearheading the sectoral declines, with AT&T, Soitec, and Technoprobe leading the pack with losses ranging from 9% to 13%.

Despite strong earnings in Europe this quarter offering some respite, the drop on Friday demonstrated how swiftly investor confidence can be shaken by shifting global sentiment. Investors are grappling with the question of high capital expenditure relative to the timeline of returns, and currently, no clear answer is emerging. Meanwhile, the Eurozone economy expanded faster than anticipated in the latest quarter, defying the impact of expensive energy, despite rising borrowing costs and inflation.

French consumer prices surged more than expected in October, recording the highest rate since December 2023. Political instability in France and mounting pressure from high government debt have driven French bond yields to multi-year highs. Despite the headwinds, some stocks managed to gain. Universal Music Group surged 7.89%, the best performer among STOXX 600, after reporting a rise in subscription streaming revenue in Q3.

BP edged higher after posting stronger-than-expected net income, while Puma rose 5.59% following a sales beat. Sanofi also gained 4.71% after reporting better-than-anticipated Q3 results and updating its outlook. Other notable movers included Bayer, which increased 5.46% following a favorable trial verdict on claims that its Roundup weedkiller caused cancer.