European shares join a global sell-off as AI spending fears rattle Wall Street and Asian markets

European shares have fallen after sharp losses in Asia and on Wall Street. Doubts over huge AI investments and fears of curbs following the Democrats' US midterm victory have rattled global markets.

Most major European markets fell more than 1%, with media, healthcare and retail stocks leading the declines.Image: REUTERSAdvertisementEuropean shares fell sharply in early trading on Friday as a global sell-off fueled by concerns over artificial intelligence stocks spread from Wall Street to Asia and Europe.

Fears of curbs on AI data-center spending have added to investors' concerns after Democrats won control of both chambers of the US Congress.

The pan-European STOXX 600 index dropped 1.6% in early trading, wiping out its gains for the week. Most major European markets fell more than 1%, with media, healthcare and retail stocks leading the declines.

European markets had previously weathered the week's turbulence better than their Asian and US counterparts because of their more limited exposure to AI stocks.

Earlier, Japanese and South Korean shares tumbled after a massive selloff in tech stocks on Wall Street the previous day.  

Tokyo's benchmark Nikkei 225 index fell 5.5% in early trade, while Seoul's tech-heavy Kospi index slid as much as 8.8%, triggering a circuit breaker which suspended trading for 20 minutes. Taiwan's benchmark TAIEX index was also down more than 8%.

Asian tech giants including Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) have borne the brunt of the artificial intelligence-related selloff.

Chip-related shares in Japan also took a beating, with Tokyo Electron stock trading down around 9% and Kioxia shedding 13%.

US markets were hammered on Thursday by a sharp retreat in tech stocks, particularly those involved in the buildout of artificial intelligence infrastructure like data centers. 

The tech-heavy Nasdaq fell 5.52% and shed as much as $2.5 trillion (roughly €2.23 trillion) in market value, while the broader S&P 500 index plunged 4.4%.

The rout occurred as investors grow increasingly anxious about the colossal AI spending plans and whether they will eventually produce commensurate profits.