European stock markets closed with widespread declines, dragged down by the strong correction in Wall Street and Asian markets amid doubts about the profitability of investments in artificial intelligence and the risk of increased regulation of the sector in the US. The Stoxx 600 fell by around 1.0%.
Media and consumer sectors were among the most lagging, with declines close to 2%. In contrast, airlines and some renewable energy companies showed better relative performance. Among companies, IAG regained ground after reporting results and managed to advance by around 2%.
By indices, the IBEX 35 fell by around 0.6%, the Euro Stoxx 50 lost 1.0%, while the DAX and the FTSE 100 also recorded declines. Despite today's drop, the Spanish index accumulated a weekly revaluation close to 3.8%, in contrast to the approximate decline of 0.5% of the Stoxx 600.
Key points of the session
The sharp fall of the Nasdaq on Thursday, exceeding 5%, caused a contagion to Asian and European stock markets. Investors continued to reduce their exposure to companies linked to artificial intelligence after the Democratic victory in the US midterm elections. The prospects for increased oversight of data centres added to the doubts about high valuations and the financing of technological investments.
In the US, non-farm payrolls reached 165,000 jobs in October, compared to the 65,000 expected by consensus, while the unemployment rate fell from 4.2% to 4.1%. Additionally, the figures for August and September were revised upwards by 84,000 jobs. The strength of the labour market reinforced expectations of a new rate hike by the Federal Reserve in December, limiting the prospects for a relaxation of financial conditions despite the recent stock market correction.
At the European close, the S&P 500 was up 1.0% and the Nasdaq was up 1.8%, while the Dow Jones remained virtually flat. The recovery was concentrated in semiconductor manufacturers, with Nvidia, AMD, and Micron recovering some of the heavy losses from Thursday.
Fixed income
The publication of a significantly higher-than-expected US employment figure caused a rise in Treasury yields, reinforcing expectations of a new monetary tightening by the Fed.
The yield of the German 10-year Bund stood at 3.25%, rising by 2 basis points. Meanwhile, the yield of the 10-year US Treasury rose by 2 basis points to 4.85%.
Commodities and currencies
The Brent traded at $97.6 per barrel, down 0.7%. The persistence of attacks on oil tankers in the Persian Gulf and the Strait of Hormuz continued to limit the decline and maintain high volatility. The euro lost ground against the dollar.
The EUR/USD fell by 0.6%, settling near $1.115 per euro. The US currency received support from demand for safe-haven assets and the employment data.
