European Markets Dropped 1% Following Sharp Losses In Artificial Intelligence-Linked Stocks

Bridgette Randall
27 Jan, 2025
London

Stock market indexes in Europe dropped sharply following losses in artificial intelligence-related stocks, and investors awaited decisions from major central banks this week.

Benchmark indexes in Paris, Frankfurt, Milan, and London dropped as much as 2% before recovering to losses between 0.5% and 1% after artificial intelligence-linked stocks plunged more than 5% amid rising competition from China.

On Thursday, the European Central Bank is widely anticipated to trim its key lending rates amid weak economic outlook and weakening inflationary pressures.

The European Central Bank is expected to lower its policy rates by 25 basis points, but Sweden’s Riksbank may pause after trimming rates three times in a row.

Investors are also awaiting the release of GDP growth data in the eurozone, Germany, France, and Italy.

Moreover, Germany’s retail sales and Switzerland’s foreign trade data are likely to garner headlines next week.

On Thursday, the U.S. Federal Reserve is likely to hold rates at the end of its two-day policy meeting, as policymakers struggle to balance strong economic growth with resurgent inflationary pressures.

In addition, investors are looking forward to the release of corporate results from about 80 companies in Europe, including updates from LVMH, SAP, ASML, Lonza Group, Roche, Shell, ABB, Alas Copco, and Logitech. 

 

Europe Indexes and Yields

The DAX index moved lower by 1.4% to 21,102.92; the CAC-40 index fell 1.1% to 7,849.02; and the FTSE 100 index eased by 0.2% to 8,487.62. 

The yield on 10-year German bonds inched lower to 2.49%, French bonds declined to 3.26%, the UK gilts fell to 4.64%, and Italian bonds edged lower to 3.62%.

The euro was flat at $1.05; the British pound was flat at $1.24; and the U.S. dollar was higher at 90.59 Swiss cents.

Brent crude decreased $0.27 to $78.23 a barrel, and the Dutch TTF natural gas was flat at €49.91 per MWh.

 

Europe Stock Movers

Ryanair Holdings Plc gained 0.6% to €19.81 after the Irish airline carrier posted a 9% increase in passenger traffic at marginally higher fares supported by the stronger Christmas and New Year bookings.

Artificial intelligence-related stocks fell sharply after the China-based DeepSeek's models were deemed to be better and cheaper than the ones available from the U.S.-based technology companies. 

ASML Holding dropped 9% to €632.80, STMicroelectronics declined 2.2% to €23.79, and Siemens AG decreased 4.6% to €198.70.