European stocks fell on Thursday, with the STOXX 50 down 0.7% and the STOXX 600 slipping 0.3%, tracking losses across US and Asian markets amid a global tech sell-off. Chip stocks tumbled on concerns over AI-related valuations, while high US inflation and elevated oil prices added to investor caution. Markets also kept a close eye on fresh corporate earnings. ASML Holding plunged 6.6%, while Infineon and STMicroelectronics dropped 9.2% and 7.3%, respectively, among the STOXX 600’s worst performers. Basic resources and industrial goods stocks also came under pressure, with Siemens falling 2.7%, Schneider Electric losing 5.1%, ABB declining 4.6%, and Siemens Energy dropping 7.7%. In contrast, telecoms and household goods stocks advanced. Ericsson led the STOXX 600, surging nearly 10% after returning to sales growth in Q3 and reporting better-than-expected earnings. Pernod Ricard added 3.4% after a smaller-than-expected sales decline last quarter.

The annual inflation rate in France came in at 3.1% in September 2026, revised up from the preliminary estimate of 3.0% and picking up from 2.4% in August. This marked the highest reading since January 2024, driven mainly by a sharp acceleration in energy inflation to 21.3% from 16.7%, particularly as petroleum product prices rose 36.2%. Meanwhile, services inflation accelerated to 2.4% from 1.9%, while food inflation increased to 1.4% from 1.1%. The decline in manufactured product prices also eased to 0.3% from 0.4%, while tobacco inflation remained unchanged at 3.3%. On a monthly basis, consumer prices fell 0.3%, following a 0.7% increase in August, as seasonal declines in services prices, particularly for accommodation and transport, outweighed further increases in energy prices. Meanwhile, the EU-harmonised annual inflation rate rose to 3.4% from 2.6%, while monthly HICP fell 0.3% after increasing 0.7% in August.

The Nikkei 225 Index plunged 4.9% to close at 64,426 on Thursday, marking its biggest one-day drop since March as the selloff in technology stocks intensified on mounting concerns over the sustainability of massive artificial intelligence investments. The sector’s credit outlook deteriorated on expectations that policymakers will have to raise borrowing costs to contain persistent energy-driven inflation. Japanese companies have significant exposure to the global AI infrastructure buildout, leaving them vulnerable to sharp market repricing amid AI elevated valuations. Tech and AI-linked stocks led the declines in Japan, with sharp losses from Kioxia (-12.5%), Advantest 9-14.2%), SoftBank Group (-8.9%), Taiyo Yuden (-10%) and Lasertec (-13.3%). Banking stocks also weakened, including Mitsubishi UFJ (-1.6%), Sumitomo Mitsui (-1.7%) and Mizuho Financial (-2.7%).

The US dollar index slipped to around 102 on Thursday, retreating from 18-month highs as investors continued to evaluate the Federal Reserve’s monetary policy outlook following stronger-than-expected inflation data. Figures released Wednesday showed that annual headline inflation accelerated to 3.7% in September, surpassing forecasts of 3.6%, while core inflation edged up to 2.6%, above expectations of 2.5%. Chicago Fed's Austan Goolsbee described the figures as “discouraging” and cautioned that the rapid expansion of AI infrastructure could also be overheating the economy. However, some policymakers continued to favor a cautious approach to further rate increases, with markets pricing in roughly a 73% probability that the Fed will keep interest rates unchanged this month. Investors are now awaiting further remarks from Fed Chair Kevin Warsh ahead of the central bank’s media blackout, which begins on Saturday. The dollar weakened the most against the euro, sterling and kiwi.

Japan’s 10-year government bond yield declined by around 7 basis points to 2.93% on Thursday, reaching a five-week low as a global stock market selloff boosted demand for safe-haven government bonds. The equity downturn, led by technology and artificial intelligence stocks, intensified after US inflation data came in hotter than expected. Domestically, Bank of Japan board member Junko Koeda cautioned against excessive restraint in raising interest rates, signaling that the central bank may remain on course for further rate increases in the coming months. Meanwhile, BOJ Governor Kazuo Ueda said earlier this week policymakers would continue monitoring bond yields closely, reiterating that long-term interest rates should be determined by market forces. His remarks reflected a measured approach as the central bank continues its transition away from strict yield curve control.

Brent crude fell below $104 per barrel on Thursday, likely reflecting a technical correction and profit-taking following a recent rally in oil prices. Investors also assessed reports that the US is considering relaxing sanctions on so-called shadow fleet vessels that have transported oil and petroleum products from countries such as Russia, Iran and Venezuela, as part of efforts to ease record-high global freight rates. However, supply concerns remained elevated after a container ship sank in the Strait of Hormuz on Wednesday following a strike by unidentified projectiles, while Iran-backed Houthi forces continued missile and drone attacks across Saudi Arabia. Russia also accused Ukraine of attacking two oil refineries on Wednesday, including the 400,000-barrel-per-day Ryazan facility, breaching an “energy ceasefire” announced by US President Donald Trump.