Europe close: Stocks finish lower amid global tech rout

14th Nov 2025 17:40

(Sharecast News) - European equities fell sharply on Friday as a tech-led selloff on Wall Street, renewed questions over artificial intelligence valuations and a lack of data caused by the US government shutdown dampened expectations for a December interest rate cut.

"Wall Street gloom has spread across European and Asian markets like a contagious disease," said Dan Coatsworth at AJ Bell, with investors fretting about cracks in the narrative behind the multi-year tech rally.

The Stoxx 600 dropped 1.01% to 574.81, while Germany's DAX slipped 0.69% to 23,876.55 and France's CAC 40 declined 0.76% to 8,170.09.

London's FTSE 100 shed 1.11% to 9,698.37 as risk appetite weakened across the region.

Coatsworth added that investors are now "worried about rich equity valuations and how billions of dollars are being spent on AI just at a time when the jobs market is looking fragile."

Pressure intensified after another volatile Wall Street session.

Patrick Munnelly at TickMill said "Wall Street faced a sharp sell-off once again... spurred [by] traders to shed riskier assets, ranging from tech stocks to cryptocurrencies," noting that concerns over lofty valuations had re-emerged as the optimism surrounding the end of the shutdown faded.

UK gilts under early pressure on reports Reeves has dropped tax hike plans

UK gilts came under pressure early in the session after reports that chancellor Rachel Reeves had abandoned plans to raise income taxes in the upcoming Budget.

Coatsworth said that "speculation that Chancellor Rachel Reeves has ripped up part of her Budget plan only days before the big event has spooked the bond market," with gilt yields rising as "bond investors [wonder] which alternative path she might take to repair UK public finances."

The Financial Times said proposals to increase both basic and higher rates had been dropped amid concerns over voter backlash and unrest among Labour MPs.

The initial reversal unsettled markets, sending the 10-year gilt yield up 13 basis points to 4.57% and pushing the pound lower.

Later reports suggested the rethink was driven instead by a better-than-expected fiscal forecast from the Office for Budget Responsibility, which has reduced the size of the projected deficit from as much as £35bn to nearer £20bn.

That helped calm bond markets, and by late morning yields had eased back to around 4.50%.

Coatsworth warned that higher gilt yields could push up mortgage costs, explaining that the situation is "bad news for mortgage lenders as pricier home loans could make it more challenging for certain people to get on the housing ladder."

He said this dynamic helped drive selling in Lloyds, NatWest and several UK housebuilders.

Fresh Chinese data added to the cautious mood overnight.

Industrial production rose 4.9% year-on-year in October, the slowest pace since August last year, while retail sales growth eased to 2.9%, also a 14-month low.

Fixed-asset investment fell 1.7% in the first ten months of the year, the sharpest drop since mid-2020.

Munnelly said that Asia had already endured a sharp sell-off earlier in the day, noting that "Japan's Nikkei index slid 2%, while Australia's resource-heavy stocks lost 1.4%... [and] China stocks dipped 0.9% after monthly activity data revealed slower-than-expected growth."

He added that October credit growth in China was "the lowest since 2015," pointing to a weak backdrop for both consumers and businesses.

Technology plays lead declines amid global AI rout

Tech stocks led sector declines in Europe, mirroring overnight losses in the US.

Coatsworth warned that "investors are worried about rich equity valuations" in the AI space, and Munnelly said that risk aversion had triggered a "notable pullback in high-flying tech stocks, while some analysts noted a shift toward more defensive sectors."

Infineon fell 1.64%, SAP lost 3.21% after offering concessions to settle an EU antitrust probe, and BE Semiconductor dropped 1.79% amid renewed scrutiny of stretched AI-linked valuations.

Novo Nordisk slipped 2.39% after shareholders voted to replace its independent board members in a leadership overhaul.

On the upside, Bechtle jumped 14.97% after the German IT group reported a return to growth.

Reporting by Josh White for Sharecast.com.