Europe midday: AI fears hit sentiment; BoE split but holds on rates

5th Feb 2026 10:53

(Sharecast News) - European shares opened lower as fears over the level of investment tech companies were splashing on artificial intelligence on top of already high valuations hit sentiment in the US and Asia overnight.

The pan-European Stoxx 600 index was down 0.33% to 616 at 1202 GMT with all major bourses in the red. Traders were also eyeing a rate decision from the European Central Bank, while the Bank of England held steady in a 5-4 split decision by policy makers.

"With yesterday's Eurozone inflation figure of 1.7% coming in way below target, there may be some growing calls for a further drop in borrowing rates," said Hargreaves Lansdown analyst Derren Nathan.

"That could go some way towards halting the euro's ascendancy against the dollar, providing some much-needed relief for exporters."

"Recent BoE votes have been far more tense than the relative unity seen by European rate setters. Once again, today's vote split will provide vital clues around the likely direction of travel. A surprise uptick in December's inflation to 3.4% was a timely reminder of the tightrope being walked by UK policymakers."

Investors were rattled when Google parent Alphabet beat on both the top and bottom lines, as it revealed it would significantly increase its AI spending in 2026. The company shocked analysts when it said capital expenditure would be $175bn - $185 billion this year, well above Wall Street estimates.

In economic news, retail volumes fell by more than expected in the eurozone in December, according to official figures released by Eurostat, the statistical office of the European Union. The volume of retail trade fell 0.5% in both the eurozone and across the wider bloc.

The decline reversed the upticks seen in November, of 0.1% in the Eurozone and 0.2% in the EU.

The morning also saw another dump of corporate earnings and updates. Shares in Shell fell after the energy giant a 40% slump drop in earnings to $3.25bn for the last three months.

Danish shipping giant Maersk slumped after warning that declining freight rates would impact earnings this year.

Rational surged after the German commercial and industrial kitchen equipment maker posted a jump in annual revenue growth.

Pandora shares sparkled after the Danish jeweller said it would start selling platinum-plated jewellery to reduce its reliance on silver amid surging prices for the precious metal.

Reporting by Frank Prenesti for Sharecast.com