Global AI Stock Rout Wipes Out $3 Trillion, NFP Today

A rout in AI and chip stocks deepened on Thursday and into Friday, wiping roughly $3 trillion off Wall Street and sending Asian shares tumbling overnight. The Bank of England delivered its first rate hike in more than three years, while the dollar firmed on haven demand. Friday's closely watched US non-farm payrolls report is due later in the session.

Equities

The FTSE 100 fell 0.43% on Thursday, slipping back after touching a near three-month high earlier in the session, as losses in bank and defence stocks weighed. The FTSE 250 dropped 0.86% on the day, having earlier reached an all-time high. Both indices were extending losses in early Friday trading as the global selloff in technology shares spilled into Europe.

Banking stocks gave back some of Wednesday's strong gains after the Bank of England raised interest rates for the first time in more than three years. HSBC, Standard Chartered, NatWest and Barclays all fell as investors weighed the hike alongside the BoE's warning that UK inflation could reach around 5% by the middle of next year. Defence stocks also slid after Tuesday's Democratic sweep of the US Congress stoked concerns over future military spending, with Rolls-Royce and BAE Systems both falling.

Coca-Cola HBC was the FTSE's biggest decliner, dropping nearly 18% in its steepest one-day fall on record, after the bottler was forced to deny press speculation over its Russian operations. Hikma Pharmaceuticals fell after trimming the top end of its annual profit forecast. Precious metals miners rose, tracking firmer gold prices, while retailers and other defensive names also gained.

On Wall Street, the Dow Jones fell 3.4%, the S&P 500 slid 4.4% and the Nasdaq dropped 5.5% on Thursday, confirming a correction from its record high, as a deep selloff in chip stocks followed weak results from Qualcomm. Qualcomm shares dived after its smartphone chip sales missed estimates, while Nvidia fell as investors grew nervous that a Democrat-controlled Congress could slow AI infrastructure spending. Tesla, led by Elon Musk, slumped almost 11% while SpaceX fell, as the broader rout hit high-valuation tech names hardest.

Asian markets extended the selloff overnight: Japan's benchmark posted its steepest one-day drop since April 2025, while South Korean and Taiwanese shares each plunged more than 8% intraday before paring losses as authorities moved to steady sentiment. Nasdaq futures edged higher by Friday morning while European futures stayed under pressure, pointing to a fragile start to the session.

Forex & Commodities

The dollar index rose 0.3% as the rout in global equities drove investors into traditional safe havens, even though falling Treasury yields capped further gains ahead of Friday's payrolls report. The yen and Swiss franc also firmed on haven demand, while the euro slipped against the dollar but remained on track to end the week higher.

Sterling eased against the dollar even after the Bank of England raised interest rates for the first time in more than three years, a hike that had been widely expected by markets. The BoE signalled a second rise is more likely than not unless there is progress toward resolving the conflict in the Middle East, and warned UK inflation could near 5% by the middle of next year.

Gold eased back as a rebound in oil prices revived inflation worries, denting the metal's haven appeal even as broader markets sold off. The metal remained on track for its best week since August, with silver, platinum and palladium all also set for weekly gains.

Oil rebounded after this week's sharp selloff, with Brent briefly climbing back above $100 a barrel, as fresh tanker attacks in the Strait of Hormuz revived Middle East supply concerns. That offset growing hopes for a de-escalation in the US-Israeli war with Iran following this week's US midterm result. Crude was still on track for a steep weekly loss despite the rebound.

Friday's non-farm payrolls report, due at 1:30pm GMT, is expected to show a pickup in hiring and will shape expectations for the Federal Reserve's next move.