The FTSE 100 index dropped as much as 254 points, or 2.35%, to 10,528 points on Friday morning as a wave of selling swept across global stock markets following a sharp decline in US tech stocks on Thursday. The rout began on Wall Street after the Democrats' victory in the midterms, with the Nasdaq suffering its worst day in 19 months by slumping 5.5% on Thursday. However, the FTSE recovered some losses by the close of trading, ending the day down 1% after US stocks rose when Wall Street reopened on Friday. Germany's Dax index fell by 2%, France's Cac 40 dropped by 0.8% and Spain's Ibex lost 0.6%.
The sell-off spread rapidly across Asia on Friday, with Japan's Nikkei 225 index sinking 6% and South Korea's Kospi index tumbling more than 6.5%. On Wall Street, chip stocks led the decline on Thursday, with memory maker SanDisk tumbling by 22% and hard drive maker Western Digital falling by 17%. Wall Street's volatility measure, the Vix, jumped by more than 60% to its highest levels since the early weeks of the Iran war. However, sentiment improved on Friday when the US economy added 165,000 new jobs in October, pulling the unemployment rate down to 4.1%. This stronger-than-expected employment report helped lift US tech stocks on Friday, with the S&P 500 rising 0.3% and the Nasdaq closing up 1%.
Market analysts attributed the turmoil to investor worries about artificial intelligence investment. Susannah Streeter, chief investment strategist at Wealth Club, said that "the build-out of datacentres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment." Christopher Forbes, head of Asia and Middle East at CMC Markets, described the situation as "actually a bit of a disaster", noting that clients faced margin calls and losses on their positions. Chris Beauchamp, chief market analyst at IG, warned that "with AI fears still prominent there is a risk that there is much more selling to come."
Despite the sharp falls, most major indices remain positive for the year. The Nasdaq Composite index is up 6.35% since the start of January, though it is more than 10% below its peak. The FTSE 100 has gained almost 7.5% in 2026 but is now more than 300 points below the record high set in July. Mohit Kumar, an economist at Jefferies, said he did not expect the decline to mark "the start of the unwind of the AI trade", noting that AI investment has been a key driver of US growth. The copper market also suffered, with benchmark three-month copper dropping 0.61% and positioned for its biggest weekly fall since March, influenced increasingly by sentiment towards datacentre expansion.
For UK savers and investors, the sharp fall in UK equities on the FTSE 100 means portfolios tracking British blue-chip stocks suffered significant short-term losses, though most remain ahead for the year.