FTSE 100 drops 1.5% as global tech rout and AI investment fears hit Europe

British stocks fell on Friday, according to Yahoo Finance Singapore, as a global tech rout over artificial intelligence investment worries after the United States midterms spread to Europe. As trading got underway, the FTSE 100 fell 1.5%, as of 03:25 ET (08:25 GMT). Germany's DAX lost 1.43%, while France's CAC 40 was down 1.20% and sterling slipped 0.47% to $1.3401. Thursday's Wall Street rout, which featured the S&P 500 down 4.4% and the Nasdaq Composite down 5.5%, subsequently hit Asia.

Japan's Nikkei and South Korea's KOSPI both closed down 6% during the initial regional wave. Jefferies saw no quick rebound, noting the session involved the biggest retail selling since COVID. However, Asian markets later managed a partial recovery, according to Yahoo Finance UK, as investors bought beaten-down technology shares following the sharp selloff driven by concerns over debt financing for the artificial intelligence boom and intensifying competition from China. South Korea's KOSPI climbed 3.3%, while Japan's Nikkei 225 advanced 1.7%, recovering some of Thursday's steep losses as semiconductor stocks regained ground. South Korean memory-chip makers led that particular recovery, with Samsung Electronics rising 2.9% and SK Hynix gaining 2.22%. Japan's Kioxia advanced 3.3%, while Sony rose 2.9%. Hong Kong's Hang Seng gained 1.2%, China's CSI 300 rose 0.9%, the Shanghai Composite added 1.1%, and Taiwan's benchmark index advanced 0.7%, although shares of Taiwan Semiconductor Manufacturing Co. Edged down 0.4% despite reporting record quarterly profits and issuing an upbeat revenue outlook.

The global tech selloff was intensified by concerns about the financial risks underpinning the artificial intelligence investment boom, particularly the debt burden of cloud-computing company CoreWeave. Its shares recovered some ground on Thursday after extending Wednesday's 15.5% slump early in the session, when reports that its bond yields had reached distressed-debt levels helped fuel a broader global selloff in AI-linked stocks. The selloff also reflected worries over Chinese competition after ChangXin Memory Technologies (CXMT) reported progress on a next-generation DRAM architecture that could intensify competition with established manufacturers such as SK Hynix and Samsung. CXMT shares rebounded nearly 5% on Friday.

While most of Asia participated in the late-session rebound, Indonesia's equity market bucked the regional recovery. The Jakarta Composite plunged more than 11% in its steepest one-day decline since January 1998, after MSCI proposed reclassifying the country from emerging-market to standalone-market status. MSCI cited persistent concerns over market transparency and functioning, including opaque shareholding structures and suspected coordinated trading, saying reforms had not progressed sufficiently. The Indonesian benchmark index was already the world's worst-performing this year, with its benchmark index down more than 30% and foreign investors recording net equity sales of $4.7 billion. Indonesia's stock exchange stated it had taken steps to improve transparency, while chief executive Jeffrey Hendrik sought clarification from MSCI. MSCI froze additions of Indonesian securities to its indexes in January and will seek feedback until April 2027, with a final decision due by the end of June next year.

Domestically in the United Kingdom, house prices fell 0.6% in October as renewed inflation kept borrowing costs high, with London prices down 3.1% year-on-year and mortgage approvals falling 19.4% over the same period. Lloyds expects subdued conditions in the near term but no sustained decline. MJ Gleeson expects a weaker first half of fiscal 2027 as subdued sales and potential cancellations ahead of the April launch of the Your First Home scheme weigh on performance, with full-year consensus dependent on a second-half recovery. Rightmove expects 2027 revenue growth to be similar to 2026, as affordability pressures and higher mortgage rates weigh on new home construction and advertiser spending, while narrowing its 2026 revenue growth guidance to 6% to 7%. IAG expects annual capacity to be slightly lower year-on-year as Middle East flight disruptions weigh on operations, while third-quarter operating profit missed consensus despite strong forward bookings.

Central bank policy measures also weighed on market sentiment. The Bank of England raised rates to 4% on Thursday and sees inflation peaking at 4.9%. Markets price a roughly 50% chance of another Bank of England hike in December, ING said, after all nine policymakers voted for higher rates on Thursday. ING expects one more increase by February, sooner if energy prices spike again. Jefferies does not expect a December move. Stronger-than-expected U.S. Consumer and producer inflation data, alongside resilient retail sales, raised concerns that price pressures could persist and complicate the Federal Reserve's policy outlook. Chicago Fed President Austan Goolsbee noted that some inflationary pressures could prove temporary, but persistent demand, including investment in AI data centres, could warrant a stronger policy response. Federal Reserve Chair Kevin Warsh's comments in Bangkok on Friday are set to be closely watched for further clues on the rate outlook.

Commodities reflected the broader market strain. Brent futures fell 0.67% to $97.66 a barrel and WTI fell 0.76% to $89.81, even as escalating Saudi-Houthi tensions and attacks on regional shipping kept oil-supply risks elevated, despite a possible U.S. Move to ease sanctions on some tankers to reduce freight costs. Gold futures fell 0.87% to $4,077.55 and spot gold fell 0.51% to $4,067.79 an ounce. In corporate moves, Glanbia shares tumbled 6% after Morgan Stanley cut its rating to underweight, while Verbio shares jumped 10% as Jefferies saw biodiesel margins boosting earnings.

Geopolitical tensions remained a prominent backdrop across global markets. Qatar's emir and Donald Trump discussed efforts toward a comprehensive agreement, according to the Qatari Emiri Diwan. Iran's army spokesman Mohammad Akraminia stated that Tehran would hit U.S. Assets without considering geographical limitations if attacked, and that Hormuz would reopen only if its seven conditions were met. The Revolutionary Guards reported that two tankers caught fire after striking mines, according to Tasnim news. Donald Trump stated that the U.S. May have to destroy the rest of Iran, that rebuilding would take 25 years, and that people would know soon enough if he acts. Iran has sent Washington a nuclear proposal via Qatar, though Jefferies instead described Iran as reviewing a U.S. Proposal, with the two sides still far apart. Iran's Mohsen Rezaei met Russia's Vladimir Putin on Thursday, and Putin pledged to ease tensions.

Investors now look ahead to key macroeconomic releases and official actions. U.S. Payrolls are scheduled for release later today, while market participants continue to monitor ongoing developments regarding Middle Eastern maritime security, European trade policies targeting China, and the long-term trajectory of global semiconductor demand.