European stock markets ended Friday in the red as a tech sector sell-off spread globally and investors reacted to a wave of corporate earnings reports. The pan-European Stoxx 600 index dropped 0.4% to 646.75, retreating from a seven-week high reached the previous session. Chris Beauchamp, chief market analyst at IG, noted that the tech earnings this week 'have dealt it a further blow' to market confidence in AI investments.
Most major regional indices fell, with Frankfurt, Milan, and Madrid each losing 1% or more. London's FTSE 100 held steady, supported by gains from AstraZeneca, BT, and BP. Global sentiment was weakened by concerns over the sustainability of AI investments, with chip and AI stocks declining sharply across Europe, Asia, and the US. The Nasdaq tumbled 2.7% in early New York trading, while the KOSPI in Seoul finished 3.5% lower after Alphabet's underwhelming profits and negative free cash flow raised worries about AI infrastructure spending.
Oil prices also weighed on markets, with front-month Brent crude futures rising 2.5% to $113.54 a barrel following another attack in the Strait of Hormuz. Investors continued to react to the European Central Bank's decision to keep the deposit rate at 2.5%, with a 25-basis-point hike expected in December. The ECB also announced that President Christine Lagarde plans to step down in February.
Bank earnings were a key focus, with mixed results. Crédit Agricole fell after reporting a 7.5% increase in third-quarter revenues, while CaixaBank in Madrid saw a 12.9% rise in net profit to €4.96bn for the first nine months of 2026. Austria's Erste Group raised its full-year outlook following a 20.6% increase in nine-month net profit. UK lender NatWest sank after attributable profit fell 4.4% in the third quarter. AstraZeneca, BP, and BT Group posted strong results, while chipmakers ASM International, Infineon, and ASML declined.
On the macro front, the eurozone economy grew at its fastest annual pace in over a year during the third quarter, with GDP increasing by 1.3% year-on-year, exceeding consensus forecasts of 1.1%. This marked the strongest annual expansion since the second quarter of 2025.