European Stocks Hit Record Highs on US-Iran Deal

European stocks declined sharply on Friday, with the Euro Stoxx 50 and the broader Stoxx 600 falling more than 1% as investors reduced exposure to riskier assets. Concerns that the US could impose tighter regulations on the AI industry following the Democrats’ decisive midterm election victory weighed on technology shares and triggered broader selling across sectors. However, technology stocks partially recovered later in the session, tracking a rebound in US markets as dip buyers emerged, with ASML Holding surging nearly 3%. Elsewhere, major companies remained under pressure, with Novartis, HSBC, Roche, Shell, AstraZeneca, SAP, Nestlé, L’Oréal and Siemens losing between 0.2% and 1.9%. Commodity markets also faced headwinds, as oil remained on course for steep weekly losses amid optimism over diplomatic efforts to de-escalate the Iran conflict and restore Middle Eastern energy flows. Gold also declined following stronger-than-expected US employment data, which supported the dollar.

The STOXX 50 lost 1.4% and the STOXX 600 declined 1.3% on Friday, as the tech sell-off and broader equity rout that began in the US during the previous session spread across Asian markets and into Europe. Fears that the US could tighten regulations on the AI industry, following the Democrats’ decisive election victory, weighed heavily on technology stocks and the AI trade before spreading to other sectors, leaving markets broadly in negative territory. Bayer (-2.8%), BASF (-2.1%), AXA (-1.9%), Allianz (-1.8%), Inditex (-1.7%) were among the notable decliners. The technology sector, however, proved relatively resilient, suffering the smallest losses. ASML Holding even edged up 0.1%, while Infineon slipped just 0.1%. For the week, the STOXX 50 gained 1.9%, while the STOXX 600 advanced 1.3%.

European equity markets were set to open sharply lower on Friday as a widening global stock market selloff intensified, driven by concerns over tighter regulation of the artificial intelligence industry and a possible slowdown in data center expansion following a decisive Democratic victory in the US midterm elections. The tech-heavy Nasdaq Composite has already entered correction territory, with losses spreading across all sectors on Wall Street. AI-related stocks in South Korea and Japan also suffered steep declines as investor concerns rippled across global markets. In Europe, investors will focus on the latest UK house price index, French trade figures and Eurozone retail sales data for further economic signals. On the corporate front, earnings reports are due from ENGIE, Daimler Truck, International Airlines Group, Amadeus IT and Mediobanca, among others. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both down approximately 1%.