Investing.com - European shares fell on Friday as a trio of tech earnings reports sent investors scrambling for safety, though the pan-European {{None|STOXX 600}} still posted its best month since June.
The index fell 0.4%, extending a global tech rout that began with Alphabet and deepened after Amazon and Intel reported. Technology shares across Europe were not spared.
Germany's DAX fell 0.9%, while France's CAC 40 was flat and London's FTSE 100 was up 0.1%.
Alphabet reported a revenue miss and a swing to negative free cash flow, Amazon reported free cash flow of negative $42.4 billion over the past 12 months, with third-quarter capital expenditure of $77.3 billion, more than double a year earlier. Intel forecast fourth-quarter revenue below analyst expectations, blaming a PC slowdown.
European tech stocks fell in sympathy, with ASML, ASM International, BE Semiconductor all fell over 5% each, while Infineon dropped over 4%.
Taken together, the results show the infrastructure race is straining the tech industry and now reaching consumers. Once debt-light giants have become heavy borrowers to fund data centres, while price hikes squeeze demand for devices such as PCs and smartphones.
The issue has reached policymakers. ECB President Christine Lagarde said on Thursday that long-dated borrowing costs are rising worldwide partly because hyperscalers are issuing more long-term bonds. Barclays was reported this week to be seeking default protection on more than $10 billion of AI infrastructure debt.
Europe's heavier weighting in energy, defence and banks, and a lighter one in megacap technology, has helped the STOXX 600 up over 2% for the month.
Rocky October amid French riots
A global tech selloff on fears over debt-funded AI spending pushed the index to a low of 625.5 on Oct. 8, with the U.S. 10-year yield peaking near 5.36% the day before, Riots in France pushed French yields above 5%, and oil at a five-month high caused its steepest weekly drop since early September.
Earnings have been the anchor. Third-quarter reporting started unevenly, with sharp falls in luxury names such as Kering. But LSEG data show STOXX 600 earnings on course to grow 23.6% in the quarter, the second-best showing since 2022, though energy is behind much of that, with profits up 139%. Excluding energy, growth is expected at 9.8%.
Shares in heavyweight AstraZeneca rose 4% after its third-quarter core earnings beat the $2.62 analysts expected, helped by lower costs than forecast.
Universal Music Group jumped 10%, after posting a pick-up in subscription streaming revenue in the third quarter.
Macro risks remain. The ECB held its deposit rate at 2.50% on Thursday in what economists called a hawkish pause, with markets pricing roughly a two-in-three chance of a December hike, and said it had tools to deal with disorderly markets. Hours earlier, Lagarde announced she would step down in February 2027, nine months before her term ends.
"The latest decision suggests policymakers are not in a hurry to move without clearer evidence, although the rise in energy prices and inflation running at roughly twice the 2% target keep a December increase in play," UBS analysts said.
Fresh data showed the euro zone economy grew quicker than predicted last quarter.
Original Article
European shares slip as Amazon, Intel stoke AI cash-burn fears
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