The FTSE 100 index of London blue-chip shares was down 207 points, or 1.9%, at 10,575 in mid-morning trading, putting it on course for its worst day since March. Germany’s Dax fell 1.9% in morning trading, France’s Cac 40 dropped 1.5% and Spain’s Ibex lost 1.1%. Asian markets had already fallen after Wall Street’s decline on Thursday.
On Thursday the Nasdaq had its worst day in 19 months, slumping 5.5%. Wall Street’s Vix “fear index” jumped 61% to its highest levels since the early weeks of the Iran war, a sign of rising volatility.
Investors worried that a Democratic win could slow the build-out of datacentres that has underpinned a spending boom in AI infrastructure.
Benchmark three-month copper, used in semiconductors, electronics and cars, dropped 0.61%, leaving it positioned for a 2.79% fall this week.
Chris Beauchamp, chief market analyst at IG, said Thursday’s session marked a dramatic turnaround from Wednesday. “With AI fears still prominent there is a risk that there is much more selling to come,” he said. “All in all it remains a very febrile atmosphere.”.
One analyst said AI investment had been a key driver of US growth and that Democrats would not give up on that engine. Datacentres and AI infrastructure also create jobs, and Democrats would be reluctant to let those jobs move to other states or abroad.
“Big worries are colliding – the build-out of datacentres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment,” one market comment said. Craig Lang, a principal analyst at consultancy CRU, said copper prices were increasingly influenced by the AI market and sentiment towards datacentre expansion.