European and Asian stock markets mostly fell Friday following another tech-led plunge on Wall Street as investors reassess their vast AI investments.

The dollar climbed as investors awaited US inflation data later in the day for clues on the outlook for Federal Reserve interest rates.

“The concerns that have revolved around AI disruption in the software segment have spread,” noted Joshua Mahony, chief market analyst at Scope Markets.

A sense of calm had descended on trading floors early in the week after recent asset-wide volatility, helped by forecast-busting US jobs figures that eased worries about the world’s top economy.

However, growing concern about the hundreds of billions spent on artificial intelligence infrastructure — and the bundles more announced in the past few days — have fanned speculation about when, if ever, companies will see a return.

The release of new tools this month that can perform crucial tasks in a range of fields, including legal, sales and marketing, has compounded those jitters — hammering companies worried about competition.

Analysts said that has seen traders reassign their AI investments, with the main beneficiaries being chipmakers and other firms needed to build infrastructure.

“Developments in AI, particularly around the rollout of various AGI (artificial general intelligence) products, are only vaguely understood, which makes the ability to price future risk and certainty… something of a guess,” said Pepperstone’s Chris Weston.

Artificial general intelligence is the mooted next stage of AI, when computers could outperform humans across a wide variety of tasks.

Wall Street’s Nasdaq lost more than two percent Thursday.

The weak sentiment carried over into Asia and Europe on Friday, with Tokyo and Chinese indices ending with losses of around 1.5 percent.

Europe’s main stock held up better but were still down in midday deals.

At the same time, share prices of chipmakers continued to rally. 

Attention turns to US inflation figures after a bumper American jobs report Wednesday saw traders dial down their expectations for a Federal Reserve rate cut next month.

Most now see the next reduction in July owing to signs the economy is faring a little better than initially feared.

Company earnings continued to roll in with mixed reaction.

L’Oreal shares fell four percent on the Paris stock market after the cosmetics giant posted sales that fell short of analyst expectations, stoking fears of weakness for its luxury brands and in the key Chinese market.

– Key figures at around 1130 GMT –

London – FTSE 100: DOWN 0.1 percent at 10,397.15 points

Paris – CAC 40: DOWN 0.4 percent at 8,305.45

Frankfurt – DAX: DOWN 0.2 percent at 24,811.00

Tokyo – Nikkei 225: DOWN 1.2 percent at 56,941.97 (close)

Hong Kong – Hang Seng Index: DOWN 1.7 percent at 26,567.12 (close)

Shanghai – Composite: DOWN 1.3 percent at 4,082.07 (close)

New York – Dow: DOWN 1.3 percent at 49,451.98 (close)

Euro/dollar: DOWN at $1.1858 from $1.1876 on Thursday

Pound/dollar: DOWN at $1.3611 from $1.3620

Dollar/yen: UP at 153.29 yen from 152.75 yen

Euro/pound: DOWN at 87.13 pence from 87.16 pence

Brent North Sea Crude: UP 0.2 percent at $67.63 per barrel

West Texas Intermediate: UP 0.1 percent at $62.91 per barrel

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