European Midday Briefing: Shares Fall as AI Concerns Continue to Weigh

MARKET WRAPS

Stocks:

European stocks fell Tuesday after investor concerns about high-flying tech names weighed on markets Monday.

Tuesday's declines reflected continued concerns about the sustainability of the artificial-intelligence-led boom. At the same time, ANZ said a risk-off approach was weighing on sentiment across commodities.

"In addition to the AI concerns, the risk-off tone was reinforced by the latest signals from the Fed, as investors continued to price out the likelihood of a December rate cut," Deutsche Bank said.

MUFG said that markets had scaled back bets to below a 50% chance of a reduction after Federal Reserve officials signaled caution.

Stocks to Watch

Miners were particularly hit by the sell-off. In London Anglo American and BHP faced the steepest falls on the FTSE 100, while Glencore and Rio Tinto were posting smaller declines.

Antofagasta also lost ground, as did Fresnillo, Hochschild Mining and Endeavour Mining.

In Johannesburg , Gold Fields, Sibanye-Stillwater and Harmony Gold shares fell.

Economic Insight

If the U.K. government ditches plans to raise income tax at its Nov. 26 budget, there will be fewer drivers to bring down inflation, Pantheon Macroeconomics said.

"More back-loaded and smaller tax hikes will reduce the near-term inflation drag from the budget and therefore the need for interest-rate cuts in 2026."

Market Insight

The trend of emerging markets outperforming developed markets was likely to continue in 2026, Nordea Asset Management said in a presentation.

Emerging market valuations still below those in developed markets and global allocations relatively low suggest there is significant room for greater investor inflows.

U.S. Markets:

Stock futures pointed to a lower open Tuesday, suggesting the selloff seen in the prior session was set to continue.

Forex:

The euro gained slightly against the dollar and the currency has room to strengthen further ahead of key U.S. data, ING said, adding that the exchange rate remained undervalued suggesting more scope for gains than falls.

"Risks are tilted to the downside for the dollar once the U.S. data cycle kicks in, and we expect a December Fed cut to become the market's base case again."

The dollar edges lower ahead of jobs data that could influence expectations on whether the Fed will cut interest rates again in December.

The resumption of data is "likely to lift near-term foreign exchange volatility, particularly as multiple jobs reports ahead of the December Fed meeting could drive meaningful market swings," Danske Bank said.

Sterling was flat against the dollar and steady versus the euro, but it could face renewed losses if the upcoming U.K. budget includes more tax rises than expected, Monex Europe said.

"A deluge of (often contradictory) reports has left markets with an unprecedented level of uncertainty around what to expect from the event."

Bitcoin fell to an almost seven-month low following a tech-led selloff in U.S. stocks overnight.

Risk aversion has intensified on concerns about lofty valuations of AI-related stocks and ahead of key releases including Nvidia earnings later Wednesday.

Bonds:

Eurozone government bond yields declined, tracking Treasurys amid some risk-off sentiment affecting stock markets.

"Tech concerns, the wait for the stream of important but delayed data and reduced expectations of a Federal Reserve [rate] cut next month is likely to be behind the development," SEB said.

Higher German bond issuance was seen driving the eurozone's bond supply slightly higher in 2026. UBS's initial estimate for gross government bond issuance by the eurozone's largest 11 sovereign issuers is 1.38 trillion euros in 2026, marginally higher than its forecast of 1.35 trillion euros for 2025.

"The German government's spending packages, which are set to be funded by large fiscal deficits, are a further factor reinforcing expectations of rising yields at the long end," DZ Bank said, adding that Germany's gross government bond issuance is expected to increase by 50 billion euro s to 350 billion euros in 2026.

Yields on U.K. government bonds fell as investors sought safer assets such as government bonds due to risk-off sentiment.

Jefferies holds a positive view on Italy and forecasts a further narrowing of Italian-German yield spreads early next year.

"In rates, we continue to hold a positive view on Italy and see further compression towards 60bp versus Bunds in the first quarter of 2026."

A positive carry environment, lack of idiosyncratic factors and fiscal expansion in Germany should all remain positive for Italian spreads into 2026.

Treasury yields fell, extending Monday's trend, as delayed factory orders data for August are awaited, alongside central bank speakers.

The Fed is expected to deliver a 25-basis-point interest-rate cut in December , before proceeding more cautiously, DZ Bank said, forecasting only two further 25bp rate cuts in March and June.

Despite the rate cuts, the uptick in inflation will drive the 10-year Treasury yield higher, DZ Bank expects.

A pause in the Fed's rate-cutting cycle would probably flatten the Treasury yield curve and boost the value of the dollar, Franklin Templeton Institute said.

This could inhibit some of the broadening investment opportunities that Franklin Templeton envisages .

Metals:

Gold prices fell for a fourth consecutive trading session, weighed down by reduced expectations that the Fed will cut interest rates again this year and as investors await delayed U.S. economic data.

Base metal prices drifted lower amid diminishing prospects of a December interest-rate cut by the Fed and as investors await the release of delayed U.S. economic data.

"Thursday's September nonfarm payrolls report is now centre stage. With the data calendar still distorted, investors are increasingly sensitive to labour-market signals as they reassess the near-term path of the Federal Reserve," Sucden Financial said.

Energy:

Oil prices slipped, pressured by prospects of a growing supply surplus and as traders continued to closely monitor Russian flows.

"Prices remain tethered between geopolitical instability and structural supply expansion," XMArabia said.

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GLOBAL NEWS

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November 18, 2025 05:11 ET (10:11 GMT)