AI Sell-Off Reaches Europe as FTSE and Dax Open 1.5% Lower

The selling is driven by investor concern that the Democrats' gains in the US midterm elections will bring tighter scrutiny of artificial intelligence and slow the construction of data centres, the capital spending that has supported valuations of chipmakers, memory producers and infrastructure suppliers. For companies and investors exposed to the AI build-out, the question has moved from whether returns will justify the spending to whether the spending itself will be curbed.

"Big worries are colliding," said Susannah Streeter, chief investment strategist at Wealth Club. She said the data centre build-out "looks set to slow", which risks undermining the spending that has driven the boom at a time when investors had already become nervous about returns on it.

In London, AstraZeneca was the biggest faller on the FTSE 100 at the open, down 2.8%. IAG, the owner of British Airways and Iberia, fell 1.5% after missing profit forecasts in a trading update, and the miners Antofagasta and Anglo American also declined.

Asian markets recovered part of their early losses after authorities stepped in. South Korea temporarily halted trading on the Kospi, and Finance Minister Lee Hyoung-il eased rules on leveraged investing by retail investors, Al Jazeera reported. State entities in China bought shares to steady the market, according to Al Jazeera's correspondent in Beijing.

Taiwan's market, home to the world's largest contract chipmaker, closed 4.5% lower after falling more than 8% at the open. Over the week the index lost 12.2%, its steepest weekly fall since 1991, according to LSEG data. Taiwan's economy ministry said in a statement on Friday that demand for AI, high-performance computing and cloud services is expected to keep expanding.

TSMC fell as much as 8.5% before closing 4.7% down. In Seoul, SK Hynix closed 9.4% lower and Samsung Electronics nearly 6% lower, both well off their worst levels of the day. In Tokyo, memory maker Kioxia and SoftBank Group each lost 11%, and the Nikkei 225 fell 6%, its deepest one-day drop since April 2025.

The trigger was Thursday's session in New York, when the Nasdaq slumped 5.5%. Memory maker SanDisk fell 22% and hard drive maker Western Digital dropped 17%, while the VIX volatility index jumped 61% to its highest level since the early weeks of the Iran war. Al Jazeera put the value wiped off S&P 500 companies at $3 trillion.

Some analysts said the political shock landed on a trade that was already fragile. Toby Walsh, chief scientist at the AI Institute of the University of New South Wales, told Al Jazeera he expected new rules on data centres in several countries, including the US, Australia and the United Kingdom, because developers had built without securing local support. "We're spending money a bit too quickly," he said, adding that the sell-off could let the bubble "deflate in a manageable way".

Most major indices remain higher for the year. The Nasdaq Composite is still up 4.6% since the start of January, though it is now more than 10% below its peak, and the FTSE 100 has gained almost 6.9% in 2026 but sits more than 300 points below the record it set in July.