Global stocks plunge amid AI slowdown fears after Democrats’ midterm triumph

Asian and European markets follow Wall Street with sharp fall as FTSE down 1.9%

European stock markets have fallen sharply as a rout in US tech stocks spread across the Atlantic, after the Democrats’ midterms victory sparked fears of a slowdown in the AI industry.

A sell-off on Wall Street on Thursday was followed by sharp falls in Asian stocks markets on Friday morning. The investor sentiment then reached London, where the market is poised for its worst day since March.

The FTSE 100 index, which tracks blue-chip shares listed in London, was down 207 points, or 1.9%, at 10,575 points in mid-morning trading.

Germany’s Dax index fell by 1.9% in morning trading, France’s Cac 40 dropped by 1.5% and Spain’s Ibex lost 1.1%.

Susannah Streeter, the chief investment strategist at Wealth Club, said: “The tech sell-off has intensified, with the pain of the brutal sell-off on Wall Street carried straight through to Asia and knocking sentiment in Europe.

“Big worries are colliding – the build-out of datacentres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment.”

On Thursday the Nasdaq share index had its worst day in 19 months after slumping 5.5%.

Chip stocks led the slump, with the memory maker SanDisk tumbling by 22% and the hard drive maker Western Digital falling by 17%. Wall Street’s “fear index”, the Vix, jumped by 61% to its highest levels since the early weeks of the Iran war, in a sign of rising market volatility.

The heavy falls continued in Asia on Friday, with Japan’s Nikkei 225 index sinking 6% and South Korea’s Kospi index tumbling more than 8%.

“It’s actually a bit of a disaster,” said Christopher Forbes, the head of Asia and Middle East at CMC Markets. “[Clients] were long index, long stocks, and they all got carried out. All night, all day – we had client margin calls, client complaints … because it’s a very emotional thing, right? People are wedded to their positions and views on a stock or outcome, and you’re telling them: ‘Look, you’ve just lost money.’”

Chris Beauchamp, the chief market analyst at the investing and trading platform IG, said: “Yesterday’s brutal session marked a dramatic turnaround from Wednesday, but with AI fears still prominent there is a risk that there is much more selling to come.

“Investors remain on watch for a potential resumption of the Iran conflict, and are nervously watching the oil price after its slump earlier in the week. All in all it remains a very febrile atmosphere.”

However, despite the sharp losses suffered on global stock markets around the world, most indices are still up for the year.

The Nasdaq Composite index remains up 4.6% since the start of January – even though it is more than 10% below its peak.

The FTSE 100 has gained almost 6.9% in 2026 – but it is now more than 300 points below the record high set in July.