The FTSE 100 (^FTSE) and European stocks continued to tumble on Friday as a tech rout that has bruised Wall Street this week showed no sign of abating. According to IG, around $1tn (£737m) has been wiped from the market value of the S&P 500 software index after it posted a fall of 21% from its 200-day average.
It came as Amazon (AMZN) shares plunged in after-hours trade on Thursday, falling around 11%, as the company projected a surge of more than 50% in capital expenditures this year. It plans to pump $200bn into its AI efforts in 2026, joining other tech giants in a spending spree to build out artificial-intelligence infrastructure.
The news spooked investors, who are concerns about returns on the investment. Amazon, Microsoft (MSFT), Google (GOOG) and Meta (META) are expected to collectively spend more than $630bn on AI investments this year alone.
Charu Chanana, of Saxo Markets, said: “When AI starts to replicate tasks traditionally performed by professionals – drafting, analysing, coding, reviewing – it naturally raises questions about the long-term pricing power of certain software products.
“Investors are no longer impressed simply by the presence of AI features. This is why the pressure has shown up most clearly in (software as a service): it’s where the market is first forced to debate what AI will replace, who retains pricing power and who absorbs the costs of adoption.”
Investors are now rotating out of expensive growth stocks into more defensive, value-oriented sectors such as consumer staples, energy and industrials, with rising short interest and falling hedge fund exposure adding to pressure.
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London’s benchmark index (^FTSE) was 0.4% lower in early trade
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Germany’s DAX (^GDAXI) dropped 0.3% and the CAC (^FCHI) in Paris headed 0.4% into the red
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The pan-European STOXX 600 (^STOXX) was down 0.2%
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Wall Street is set for a negative start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red.
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The pound was 0.2% up against the US dollar (GBPUSD=X) at 1.3564
Follow along for live updates throughout the day:
LIVE 5 updates
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Amazon plans $200B AI spending surge
Cloud giant Amazon (AMZN) reported its fourth quarter results after the bell on Thursday, as a miss on its Q1 operating income estimate and a massive expansion in capex for 2026 sent shares plunging.
Amazon stock fell 8% during premarket hours on Friday.
Amazon said it anticipates Q1 operating income of between $16.5bn and $21.5bn, below analysts’ expectations of $22.2 billion. On top of that, the company said it will spend upward of $200 billion on capex for the year, a massive jump from the $125 billion Amazon was set to spend in 2025.
“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low-earth orbit satellites, we expect to invest about $200bn in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital,” CEO Andy Jassy said in a statement.
For the quarter, Amazon saw earnings per share (EPS) of $1.95 on revenue of $213.4bn, compared with the $1.96 and $211.5bn analysts were anticipating according to Bloomberg consensus estimates.
Amazon’s all-important AWS segment saw revenue of $35.6bn versus expectations of $34.9 billion.
The company’s advertising revenue topped $21.3bn, while online store sales hit $83bn.
Read more: Live coverage of corporate earnings
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Where did house prices rise and fall?
Regional differences in house price performance continue to show a widening divide between the north and the south of the UK. In the north, momentum from last year has continued, with demand and price growth remaining strong.
Northern Ireland recorded the biggest annual growth, with prices up 5.9% to £217,206. Scotland followed with a 5.4% rise, taking the average price to £221,711. In Wales, prices rose 0.5% over the year to £228,415.
Within England, the strongest growth was concentrated in the north. Prices in the North West increased 2.1% to £244,329, while the North East saw annual growth of 1.2%, bringing the typical price to £181,198.
By contrast, prices softened across much of southern England. The South East, South West, London and eastern England all recorded annual declines of more than 1%.
As the most expensive parts of the country, these markets tend to be more sensitive to higher borrowing costs and taxes, which can weigh on affordability and confidence.
Amanda Bryden, head of mortgages at Halifax, said:
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Average UK house price exceeds £300,000 for first time
Average UK house prices have risen above £300,000 for the first time, according to figures from lender Halifax.
The average price of a UK home increased 0.7% in January, reversing a 0.5% fall in December. The rise pushed the typical property value to £300,077, while annual house price growth accelerated to 1% from 0.4% the previous month.
Amanda Bryden, head of mortgages at Halifax, said:
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Asia and US overnight
Stocks in Asia were mostly lower overnight with the Hang Seng (^HSI) falling 1.2% in Hong Kong and the Shanghai Composite (000001.SS) 0.25% down by the end of the session.
In South Korea, the Kospi (^KS11) lost 1.4% on the day.
However, the Nikkei (^N225) bucked the trend, rising 0.8% on the day in Japan ahead of the country’s general election this Sunday, where PM Sanae Takaichi is seeking her own mandate after becoming PM last October.
Across the pond on Wall Street, concerns around AI and a weak batch of US data led to growing questions about the near-term outlook. The S&P 500 (^GSPC) slipped 1.2%, declining for a third session running, and the tech-heavy Nasdaq (^IXIC) was 1.6% lower. The Dow Jones (^DJI) also lost 1.2%.
Once again, software led the sell-off, with the S&P 500’s software component (-5.01%) posting a seventh consecutive fall.
The sell-off really also helped by the latest batch of US data, which helped to feed the more negative market narrative.
The weekly initial jobless claims spiked up to an 8-week high of 231k in the week ending Jan 31 (compared to 212k expected). Additionally, the JOLTS report showed that US job openings fell to just 6.542m in December (versus 7.25m expected), which is their lowest level since 2020, coming in below every economist’s estimate on Bloomberg.
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Coming up
Good morning and welcome back to our markets live blog. As usual we will take a deep dive into what’s moving markets and happening across the global economy.
Looking at the day ahead, data releases include German industrial production for December, and in the US there’s the University of Michigan’s preliminary consumer sentiment index for February.
Otherwise, central bank speakers include Fed Vice Chair Jefferson, the ECB’s Cipollone and Kocher, and the BoE’s Pill.
Here’s a snapshot of what’s on the agenda today:
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7am: Trading updates: AirtelAfrica
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7am: Halifax house prices index
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7am: German industrial production for December
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1.30pm: Canadian non-farm payroll report for December
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3pm: University of Michigan’s consumer confidence report
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