European shares fall as global AI rout gathers pace

European equity markets experienced a decline on Friday (Nov 6) as a global market rout intensified, marking a challenging week for investors grappling with uncertainty surrounding artificial intelligence stocks following Democrats' victory in the US Congress. The Stoxx 600 index, a key indicator for European shares, slipped 1% to 648.83 points by 0919 GMT, trailing losses across most major regional markets.

This marked the end of the week's gains for the Stoxx 600, which was down approximately 0.3%. Concerns emerged that a Democrat-led Congress might impose restrictions on AI data centre spending, exacerbating investor worries over tepid returns, inflated valuations, and debt-driven investments.

Susannah Streeter, chief investment strategist at Wealth Club, noted that the AI-driven expansion has contributed significantly to US growth, encompassing construction, manufacturing, and component needs. However, the soaring valuations have inflated wealth perceptions among Americans, potentially dampening consumer confidence if stock portfolios suffer.

Despite earlier declines, tech stocks, including Siltronic, ASMI, Siemens Energy, and Schneider Electric, struggled to rebound, resulting in mixed performances across the sector. Traditional safe-haven sectors, such as media, healthcare, and personal and household goods, also suffered, with declines exceeding 2%. Earnings reports revealed significant setbacks, notably Teleperformance, which dropped 18% after revising its full-year revenue growth forecast due to weakness in its trust and safety business, which was largely offset by gains in its AI-powered services.

Conversely, clean energy stocks gained traction, propelled by optimism that a Democratic-led Congress could alleviate regulatory pressures and strong financial results. Companies like Orsted and Nordex saw gains of 2.7% and 1.7%, respectively, while EDP increased 1.6% following an upgrade to its full-year recurring net profit guidance for the third consecutive year in 2026.

Airlines also benefited from expectations that the recent loss of shareholder support from the US Republican party might hasten efforts to resolve the Middle East conflict. British Airways owner IAG increased 2%, even though it projected a minor dip in annual capacity for 2026. Lufthansa and Air France KLM also enjoyed gains of 2.4% and 5%, respectively.