Europe close: Stocks finish week in the red
By Josh White
Date: Friday 07 Nov 2025
(Sharecast News) - European equities fell on Friday as investors grappled with renewed fears of a US economic slowdown, rising job losses and concerns over inflated valuations in artificial intelligence companies.
The pan-European Stoxx 600 declined 0.6% to 564.47, while Germany's DAX dropped 0.75% to 23,555.74, France's CAC 40 eased 0.18% to 7,950.18 and London's FTSE 100 fell 0.55% to 9,682.57.
Patrick Munnelly, market strategy partner at TickMill, said the week had been marked by "clashing sentiments - excitement over technological advancements clashing with rising scepticism about whether the sky-high valuations in the artificial intelligence sector can truly hold up."
He noted that "investors who had fuelled this year's market rally on hopes of Federal Reserve rate cuts and AI-driven growth are now reassessing whether massive investments in computing infrastructure will deliver the expected returns."
Market sentiment remained fragile amid an ongoing US government shutdown, which has halted the release of key economic data and clouded the outlook for monetary policy.
"The suspension of inflation and employment data is making investors nervous," said Chris Beauchamp, chief market analyst at IG, adding that the Federal Reserve and markets were now "groping around in the dark" as they assess the economy with limited information.
Kathleen Brooks, research director at XTB, said: "Global stock indices are heading towards a weekly loss after pockets of volatility have knocked market sentiment," noting that while fears over high AI stock valuations weighed on markets, "futures prices suggest that the sell-off may not gain traction on Friday."
German trade surplus narrows sharply, British retail footfall narrows
In economic data, Germany's trade surplus narrowed sharply to €15.3bn in September from €16.9bn in August, the smallest in nearly a year and below forecasts of €16.8bn.
Imports surged 3.1% to €115.9bn, the highest level since mid-2023, while exports rose 1.4% to €131.1bn.
In the UK, retail footfall fell 0.7% year-on-year in October, though high streets saw a modest 0.6% rise after a weak September.
British Retail Consortium chief executive Helen Dickinson said weak confidence ahead of a possible tax-raising Budget had kept shoppers away from retail parks and shopping centres, urging the government to deliver "a meaningful rates reduction for the industry" in the upcoming fiscal statement.
UK housing data offered a rare bright spot, with the Halifax index showing prices rose 0.6% in October, the largest monthly gain since January, pushing the annual increase to 1.9%.
"Demand from buyers has held up well coming into autumn," said Halifax's Amanda Bryden, though she cautioned that affordability "remains a challenge for many."
EY Item Club's Matt Swannell said the housing market was now being shaped by "fundamental factors, like mortgage rates and affordability" following earlier distortions from stamp duty changes.
Munnelly said the coming week would be "UK-focused," with labour and wage data expected to show "soft conditions, rising unemployment and moderating wage growth despite elevated public pay."
He added that GDP data "is expected to confirm slower Q3 growth, with manufacturing dragging while consumption and services provide support."
In the US, consumer sentiment weakened as the shutdown dragged on, with the University of Michigan index falling to 50.3 in November from 53.6.
"Consumers are now expressing worries about potential negative consequences for the economy," said survey director Joanne Hsu, adding that sentiment declined across most groups except for households with large stock holdings, which saw an 11% rise thanks to resilient equity markets.
In Asia, China's trade surplus narrowed to $90.07bn in October, its lowest since February, as exports unexpectedly fell 1.1% year-on-year following a strong September rebound.
The drop, partly linked to fewer working days during Golden Week and renewed US tariff headwinds, was compounded by a slowdown in import growth to just 1%.
Munnelly said "these trade challenges come at a time when the Chinese economy is showing signs of slowing down as the year approaches its end," echoing the week's broader narrative of fragile global demand.
ITV jumps on prospect of broadcasting sale, Rightmove in the red
On the corporate front, ITV jumped 16.6% after confirming talks to sell its broadcasting arm to Sky for £1.6bn, while Amadeus IT Group gained 1.6% following earnings.
Property portal Rightmove slumped 12.5% after warning that profit growth would slow as it boosted investment in AI, and IAG slid 11.6% after reporting weaker US demand.
Novo Nordisk lost 5.1% after agreeing to lower prices of its weight-loss drugs in a deal with US president Donald Trump.
Richemont, Daimler Truck and Cellnex Telecom also traded lower following results.
Russ Mould, investment director at AJ Bell, said: "A negative reaction to two big-name corporate results in the UK weighed on the FTSE 100, dragging it down ... as investors worried if more companies would follow suit with gloomier outlooks."
He added that "investors are feeling nervous in the wake of a mild tech sell-off in recent weeks, and the slightest hint of bad news has brought on a migraine."
Discussing Rightmove's slump, Mould said: "Investing for future growth is not a bad thing but the scale of the market's negative reaction implies real scepticism about its decision to put so much money into AI.
"The market seemed to be happy with Rightmove simply focusing on its existing strengths ... Do the expanded ambitions in AI suggest growth under its existing model is starting to be harder to come by?"
He also pointed to IAG's update as a reminder of "turbulence along the way."
"For decades British Airways' transatlantic routes have been a mainstay of the business so it's not a surprise to see weakness in this area provoke a negative market reaction," he said, adding that the stock's latest fall was "a reminder that the seatbelt sign might still go on from time to time."
Reporting by Josh White for Sharecast.com.
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