Paris and Milan stocks spearheaded a decline in European markets on Monday, as intensifying violence in France and street clashes in Italy’s financial hub heightened concerns about mounting debt levels.
Most sectors were dragged lower, while there was renewed selling of bonds and the euro.
However, tech stocks led a rebound on Wall Street on Monday, with the Nasdaq Composite climbing 1.0% as trading got underway in New York.
"There was no mistaking that last week was a tough week for the semiconductor and AI trade," said Briefing.com analyst Patrick O'Hare.
Concerns about rising investment costs and whether the vast sums pumped into the sector would see a return dominated sentiment, with investors dumping the stocks and bonds of a company providing computing power for AI firms.
"Staying true to form, though, there is a buy-the-dip bid in those stocks this morning," O'Hare added.
Whether that rebound continues may depend on tech firm earnings and their message about AI investment as more companies report their third-quarter earnings this week.
"Earnings this week will be crucial to broader risk sentiment. In particular, (Facebook parent) Meta is in focus as the first of the five major hyperscalers to report," said Saxo UK investor strategist Neil Wilson.
'Worst of it'
In Europe, Paris stocks dropped 1.7% and Milan fell 1.8% in afternoon trading.
"European shares were broadly weaker, but France and Italy are getting the worst of it," noted Saxo's Wilson.
France's President Emmanuel Macron on Sunday slammed the "unbridled" violence that erupted alongside cost-of-living demonstrations across the country, as police battled protesters and looters in new clashes in Paris.
Nearly 2,400 people were arrested Saturday in unrest that represented some of the worst urban violence in France in years, with almost 1,000 police injured, the interior ministry said.
It comes as the country's lawmakers wrangle over a 2027 budget plan that calls for billions of euros in spending cuts but which keeps France's debt levels extremely high.
In Italy, Prime Minister Giorgia Meloni was holding a security meeting Monday to address the Milan violence, which resembled some scenes of chaos and looting in Paris.
Oil prices pulled back Monday on signs that supplies continued to leave the Middle East despite Iran's chokehold on the Strait of Hormuz and ongoing attacks by Yemen's Houthis on key Saudi Arabian crude sites.
U.S. President Donald Trump's decision to waive a new package of energy sanctions on Russia also weighed on oil futures, according to analysts.
Jakarta's stock market sank over 5% on Monday, extending Friday's plunge of more than 11%, to close at its lowest level in six years.
It came after index compiler MSCI said it was "no longer appropriate" to maintain the country's emerging-market status, fuelling fears of an exodus of foreign investment.