Key Highlights

● European stocks posted their biggest drop in three weeks as the AI selloff spread.

● France's 10-year yield rose above the US 10-year yield for the first time since 2013.

● German Bund yields had their largest drop since May 2025 on safe-haven buying.

● Spotify monthly active users reached 788 million, beating forecasts of 758 million.

European stocks posted their biggest drop in three weeks on Thursday, October 22, amid a global retreat from artificial-intelligence stocks and worries about France's finances.

France's CAC 40 slid, and the selling followed sharp losses in Asia earlier in the day. When Wall Street opened, the Nasdaq Composite sank 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 fell 93.74 points to 7,663.43, its worst day since July.

The AI selloff goes global

The selling followed overnight US earnings news. Meta Platforms (NASDAQ:META) said it expects 2026 capital spending of $135 billion to $145 billion and posted negative free cash flow of $2.12 billion. Lam Research (NASDAQ:LRCX), a major chip-equipment supplier, gave guidance with a midpoint slightly below consensus and warned of supply constraints.

The reports hit chip-related stocks around the world. Europe is home to ASML (NASDAQ:ASML), the Dutch maker of advanced lithography machines and one of the most important suppliers to the global chip industry. Its Nasdaq-listed shares slid to $1,560.54 on the Lam Research read-through.

Shares of Nokia (NYSE:NOK) listed in the US also fell despite strong results. The Finnish network-equipment maker posted comparable operating profit of EUR 605 million, compared with EUR 453 million, and its sales tied to AI and cloud customers more than doubled.

France adds to the strain

Political and fiscal stress in France added to the backdrop. France's 10-year government bond yield rose above the US 10-year yield for the first time since 2013. The gap between French and German 10-year yields widened to its largest since 2011.

France has been grappling with unrest and public debt that exceeds the size of its annual economic output. "With elections not for another six months, France's bond market could remain a source of volatility," one strategist said.

German Bunds, by contrast, rallied strongly. Bund yields had their largest drop since May 2025, as investors sought safety in Europe's benchmark government debt.

Energy and geopolitics

Oil prices added another worry. Brent crude settled at $113.17, its highest since May 4, after Houthi attacks in Saudi Arabia hit Dammam airport and an Aramco oil field. A media report said the US and Israeli militaries have plans to renew strikes on Iran after the November 3 US midterm elections.

For Europe, which imports much of its energy, higher crude prices could weigh on both corporate margins and consumer spending.

Not every European company suffered. Spotify (NYSE:SPOT), the Swedish music-streaming company, soared in New York trading after its third-quarter results. Monthly active users reached 788 million, beating forecasts of 758 million, and premium subscribers rose to 306 million. Its fourth-quarter profit guidance came in above estimates.

Safe havens in demand

In currency markets, the Swiss franc and Japanese yen were the top gainers among major currencies. The euro traded around $1.1218.

In the US, investors poured into Treasuries, sending the 10-year yield back below a closely watched threshold for the first time since September 22.

French Bonds and PMI Data on the Radar

S&P Global's purchasing managers' index data on Friday, October 23, will offer a fresh read on business activity. In France, investors will watch the bond market closely for signs that the political strain is easing or deepening.

Next week's US tech earnings, including Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) on October 28, will be watched for signals on AI spending that could shape European chip stocks.