Global market downturn spreads to UK and Europe amid tech sell-off

London’s financial markets slid on Friday morning as a major tech sell-off on Wall Street spread globally.

Leading financial markets were hit by heavy falls for AI-focused firms, including chip makers and data centres firms, wiping trillions of pounds off their value.

Analysts linked the weakness to Democrat victories in the US mid-term elections and concerns over a potential AI “bubble”.

On Friday morning, the FTSE 100 fell by 1.6% after opening as traders were shaken by the wider downturn.

The index, which dropped to a four-week low, saw US-exposed firms, technology businesses and pharmaceutical companies particularly impacted in early trading.

The more domestically focused FTSE 250 was around 0.8% lower.

Technology firms Raspberry Pi and IQE were among London stocks to decline after trading opened.

Susannah Streeter, 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

“While the Footsie is set to be more insulated, given its tech-lite nature, it’s not immune, given the fortunes of listed multinationals depend on the health of the global economy.”

Elsewhere in Europe, the French Cac40 and German Dax indexes opened 1.2% and 1.5% lower respectively.

Earlier on Friday, the Asian markets followed turmoil on the US stock markets to drop firmly lower, led by plunges in the tech sector.

Japan’s Nikkei has fallen by around 6%, sending it below the 60,000 point level for the first time since May.

The Japanese index was heavily weighed down by significant drops for technology firms SoftBank and Kioxia.

Tesla shares slumped (Niall Carson/PA)

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Elsewhere, South Korea’s Kospi index has also slumped on the back of weakness in the sector.

It came after the major US equity markets saw around three trillion dollars of value wiped off.

The trading turmoil was significantly linked to worries that Democratic success in the US mid-term elections could herald a slowdown in the rapid boom across the AI sector.

The tech-focused Nasdaq 100 index closed 6.4% lower, with particular losses amid chipmakers and AI firms, with Nvidia sliding by more than 9%.

Elon Musk also saw his net worth drop during the session after shares in Tesla and SpaceX slumped by around 10% and 9% respectively.

Elsewhere, the S&P 500 index finished the session 4.4% lower as the weakness spread more broadly across other sector.

In a post of Truth Social, President Donald Trump said “the stock market suffered one of the worst days in history” as he blamed the Democrats for the market chaos.

Ipek Ozkardeskaya, senior analyst at SwissQuote, said: “The S&P 500 shed more than 4%, and the Korean Kospi is down by 5%.

“The memory-chip bubble there had already burst around June, with investors heading towards the exit all at the same time, as everyone wondered when the AI frenzy would come to an end.

“It is possible that we have reached boiling point in Nasdaq too, and now value has started evaporating.”