European shares fell Friday, erasing most of their weekly gains as global stocks declined and volatility rose amid concerns that a Democratic sweep of Congress in the United States could affect AI trades. According to Sina Finance, the Stoxx Europe 600 fell 1% at the close, less than the S&P 500’s 4.4% drop on Thursday and the Nasdaq 100’s 6.4% plunge, its worst single-day performance since March 2020. By the European close, the two U.S. indexes had risen about 0.9% and 1.9%, respectively.
Most European sectors fell Friday, while travel and leisure stocks gained. The Stoxx 600 pared losses as U.S. stock futures rose, even as resilient U.S. economic data reinforced bets on a Federal Reserve rate hike next month.
Global markets saw sharp swings this week as investors rapidly exited AI trades and moved into more defensive assets. MPPM Head of Trading Guillermo Hernandez Sampere said portfolio reallocation was to be expected and high volatility could persist for several more days, but the risk of a prolonged correction did not yet appear high.
Teleperformance SE fell 15% after lowering its full-year sales growth guidance. Glanbia Plc fell 8.5% after Morgan Stanley downgraded the Irish nutrition products maker to underweight.
Panmure Liberum strategist Joachim Klement said investors were tired and few new buyers were entering AI trades, adding that this was bearish for technology stocks and the broader market.
Despite Friday’s decline, European equities are becoming one of the more attractive markets. With technology stocks highly volatile, stable industrial companies, banks, defensive leaders and the region’s many commodity companies are considered attractive.