European stocks open lower as AI doubts and US midterm vote weigh on markets

Losses spread across European exchanges

European stock markets opened lower on Tuesday, 3 November, after a sell-off that began with US chipmakers spread to Asia and then reached the Old Continent. Milan's FTSE MIB fell 1% at the open, Madrid's IBEX dropped 1% and Frankfurt's DAX slipped 0.8%, according to Il Sole 24 Ore. Amsterdam's AEX lost 0.6%, Paris's CAC 0.5% and London's FTSE 100 0.4%. The Stoxx Europe 600 was down 0.5% in the first trades. Early readings differed slightly between outlets, so these figures should be read as opening-minutes measurements.

FTSE MIB (Milan)-1%

IBEX (Madrid)-1%

DAX (Frankfurt)-0.8%

AEX (Amsterdam)-0.6%

CAC (Paris)-0.5%

FTSE 100 (London)-0.4%

FTSE MIB (Milan)

-1 %

IBEX (Madrid)

-1 %

DAX (Frankfurt)

-0.8 %

AEX (Amsterdam)

-0.6 %

CAC (Paris)

-0.5 %

FTSE 100 (London)

-0.4 %

Data from the article text

AI valuation doubts drive tech selling

The tech sell-off follows a drop on Wall Street, where the Nasdaq closed lower on Monday evening. Investors are asking when the heavy spending on artificial intelligence will start producing returns, and that doubt has reached European chip and equipment makers. ASML Holding fell 2.6%, while Milan's STMicroelectronics lost 3.68% and Prysmian dropped 2.97%. Apple reported quarterly earnings and revenue above estimates, yet iPad sales came in below expectations and rising memory-chip prices will squeeze margins, leaving its shares down 3% after the Wall Street close. Seoul's Kospi lost 3.6% while Tokyo was shut for a holiday. A BlackRock report found that, for the first time since 2022, expected earnings growth for non-tech S&P 500 companies (29%) is running ahead of the seven largest tech companies (18%) this year.

US midterms and the Iran conflict

Voting in the US midterm elections is set to close later on Tuesday and will decide which party controls Congress for the final two years of Donald Trump's presidency. Polymarket gives a 77% probability to a Democratic-majority Senate, and a Democratic House is considered almost certain. A Congress led by Democrats could limit the White House's room to manoeuvre, so markets are holding off on new positions until the results are known. Before the opening bell, John Plassard, head of investment strategy at Cité Gestion, framed the mood for investors.

“Investors are reducing their risk-taking ahead of the US midterm elections, as doubts over the returns on artificial intelligence investments gain ground.”

Meanwhile the Wall Street Journal reported US attacks on Qeshm, an Iranian island in the Strait of Hormuz that is a key route for world oil trade. Ynet News reported that a senior Iranian official said Iran and the United States are far from a deal to end the war.

Energy prices and corporate moves

Brent crude rose 1.5% to 106.3 dollars a barrel after falling on Monday on signs of dialogue between Washington and Tehran, with the drop reported as between almost 5% and 7% depending on the source. Gas in Amsterdam climbed 3.7% to 98.4 euros per megawatt-hour, and the International Energy Agency warned that European gas storage is at its lowest level since 2013. The euro was back at 1.12 dollars, trying to recover from lows of the past 17 months as oil eased and midterm uncertainty weighed on the dollar. Royal Philips gained 6.5% after third-quarter profitability beat expectations, and Bayer rose 5.9% on higher earnings estimates. Hugo Boss fell 1.4% after cutting its sales and profit forecasts, while Stellantis lost 1.37% as October registrations fell 5.5%. Lottomatica gained 2.3% after results showed profit and revenue growth.