In Europe, the Paris stock exchange closed down 1.42%, Frankfurt fell 1.04%, Madrid slipped 1.98%, Milan dropped 2.51%, and London lost 0.27%.
On Wall Street, the Nasdaq index — which gathers the tech giants — plunged 2.60%, the broader S&P 500 declined 1.21%, while the Dow Jones — made up of more traditional stocks — finished essentially flat (+0.02%).
“The AI sector is under considerable pressure due to concerns about investments and spending”, explained the analysts at Briefing.com.
The previous day, Meta (−6.98%, at $648.85 at Thursday’s close) posted third-quarter revenue that beat expectations (+26% year over year) and signalled it would further accelerate the pace into year-end.
But “investors focused on the rising costs linked to the company’s AI investments”, noted Briefing.com’s experts.
Meta indeed expects to raise “hundreds of billions of dollars over several years” starting this autumn. The group already plans to invest 135 to 145 billion this year, and its free cash flow has moved into the red.
“Traders are increasingly skeptical about the profitability prospects of these tech giants’ colossal investments” of these digital giants, summarized Jose Torres, an analyst at Interactive Brokers.
Energy Surges
Markets also face rising oil prices.
The price of Brent crude, the international benchmark, rose 4.00% on Thursday to $113.17 per barrel, its highest since May.
“The risk premium is back in force in the oil market”, summarized AFP’s John Kilduff, an analyst at Again Capital.
In response to escorts arranged by U.S. forces to allow ships through the strategic Strait of Hormuz, which Tehran claims control over, Iran’s Revolutionary Guards, the armed wing of the Islamic Republic, warned Washington that “if this trend continued, the conflict would spread to its bases in the region”.
“This constitutes a serious warning”, they insisted in a statement published on their Sepah News site.
Concerns are also focused on Saudi Arabia’s ability to sustain a high level of crude exports, as Yemeni Houthi fighters have for weeks carried out unprecedented-scale strikes against the kingdom’s civilian and oil infrastructure.
Staff at the headquarters of Saudi oil giant Aramco were ordered to evacuate on Thursday, the day after deadly strikes on a nearby airport.
France’s Debt Under Pressure
The rise in oil prices “fuels fears of higher inflation among investors,” prompting a fresh uptick in most European borrowing rates, explained Ipek Ozkardeskaya, an analyst at Swissquote Bank.
The yield on France’s ten-year debt is particularly affected. The previous day, it exceeded 5% for the first time since 2002.
On Thursday, it finished at 5.07% at close, versus 5.01% on Wednesday night, rising above the U.S. 10-year yield (4.96%). Only Germany’s rate fell, benefiting from its status as a safe-haven benchmark. It eased to 3.33%, from 3.42% the day before.
The spread between the French and German yields, seen as a measure of investors’ mistrust of French debt, therefore widened sharply, climbing to 1.74 percentage points, the highest since 2011, up from 1.59 points the previous day.
Investors have been doubting France’s fiscal situation for several weeks, with debt and deficits among the highest in Europe, amid a tense political debate over the 2027 budget plan and uncertainties linked to next year’s presidential election.
