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 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, healthcare, and retail 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 lost 2%, and ASMI lost 1.3%, while AI equipment makers such as Schneider Electric and Siemens Energy were marginally lower.
On the earnings front, Teleperformance 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.
China, Hong Kong stocks tumble as global tech selloff deepens
China and Hong Kong stocks fell on Friday as a Nasdaq-led tech rout rippled across Asia and fuelled fears that the AI boom is losing steam, although bargain hunting helped pare losses in mainland markets buoyed by Beijing's market-supporting measures.
China's blue-chip CSI 300 Index dropped 1.4%, but notched up a 1.7% gain for the week to snap a 12-week-long losing streak.
The Shanghai Composite Index fell 1.1% on Friday, though it ended the week 1.4% higher, breaking a six-week run of declines.
In Hong Kong, the benchmark Hang Seng Index was down 1.3% but registered a 5.1% weekly gain, its best since March 2025. The Hang Seng Tech Index slid 1.8% on Friday, but posted its best weekly gain since February 2025, advancing 8.6%.
Tech sectors across Asia took a heavy blow after a steep selloff overnight in the US wiped trillions of dollars off market value, as investors fretted that a Democratic sweep in the US midterm elections could bring tighter scrutiny of the AI sector.
China's tech-focused Star 50 Index and the AI Index slumped as much as 5.2% before paring some losses.
Dong Baozhen, chairman of asset manager Lingtong Shengtai, said the overnight slump in US tech stocks meant the logic behind the AI-driven rally had crumbled.
"The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped. Can AI bull markets elsewhere hold up on their own?" he said.
Chinese AI hardware stocks with significant exposure to the US market were among the hardest hit. Zhongji Innolight 300308.SZ, which makes optical transceivers for data centres and generates most of its revenue in America, slumped 9.2% to a one-year low. Rival Eoptolink Technology tanked 7.3%.
Jason Hsu, founder and chairman of Rayliant Global Advisors, said China's sentiment-driven stock market was heavily influenced by AI stock performance in the United States.
Technology stocks carry significant weight in China's stock market and "what people are really watching closely is whether AI in the United States is a bubble," he said, adding that any signs of a bubble bursting in the US "obviously will affect the Chinese market."
Still, early panic selling drew in bargain hunters, helping trim losses after Beijing rolled out support measures and reiterated its commitment to preventing systemic risks.
"The series of domestic support measures introduced recently should provide a degree of support within a trading range and help reduce the risk of a systemic downturn," said Ailsa Liao, senior analyst at Forthright Securities.
Some analysts, however, cautioned that the measures might not be enough to insulate the market from external shocks.
"I don't think China can completely escape the fallout from Wall Street, especially with selling this aggressive," said Pepperstone strategist Dilin Wu.
"But I'd be careful about treating China's entire AI supply chain as one trade," she said, adding that growth in AI chip players like Huawei and Cambricon is mainly driven by China's push for technological self-reliance.
"When investors rush to cut risk, even good companies get sold."