European markets fell on Friday (11/06) as the technology stock sell-off that started in New York spilled over to the continent, according to Estadão Conteúdo, in an article republished by InfoMoney. For Brazilian investors, local equities took a back seat. What weighed on portfolios was the U.S. dollar and expectations that the Fed might resume interest rate hikes following a payroll report that came in well above expectations.
Why Did European Markets Fall on Friday?
According to Estadão Conteúdo, European indexes traded lower on Friday morning amid rising risk aversion. A global liquidation of technology stocks had dragged down New York the previous session and Asia overnight, while investors were still grappling with uncertainty surrounding AI-linked assets after Democrats won control of the U.S. Congress. The news agency pointed to the driver of the anxiety: the Democrats' sweeping victory in the midterms helped trigger a wave of selling in AI stocks, driven by fears that stricter regulation could stall the sector's infrastructure expansion.
This was not a one-day scare. The decline unfolded in three stages, with Europe falling last:
On Thursday, Europe had still managed to limit the damage. According to Reuters, the Stoxx 600 closed down 0.38% at 654.87 points after coming close to an all-time high during the session. On Friday, that cushion disappeared, leading to the obvious question: if the issue was American AI exposure, why did Europe fall so sharply?
Why Did Europe Fall Less Than New York and Asia, Yet See Losses Worsen Throughout the Day?
Europe fell less because it has a smaller weighting in technology. According to Estadão, the European index held up relatively better than Wall Street and Asian markets because it has fewer AI-related stocks. Curiously, on Friday morning, Europe's tech sector traded near flat, with losses concentrated in media, healthcare, and retail, which dropped more than 2%. Bloomberg described the picture differently: basic resources led the losses, while real estate and telecommunications were among the top performers. Both accounts point to the same underlying reality—a broad risk-off liquidation rather than a tech-exclusive sell-off. In addition, Teleperformance shares crashed 18% after cutting its full-year revenue growth forecast.
The decline accelerated as the session progressed. The table below compares Estadão's early morning snapshot with the closing figures reported by The Private Banker:
| Index | Morning (6:38 AM) | Close |
|---|---|---|
| Frankfurt (DAX) | -1.12% | -1.7% |
| London (FTSE 100) | -1.28% | -1.5% |
| Paris (CAC 40) | -0.89% | -1.4% |
| Madrid (IBEX 35) | -0.31% | -1.0% |
| Lisbon | -0.81% | not disclosed |
| Milan | -0.40% | not disclosed |
Closing figures varied across news outlets. The Private Banker reported that the Stoxx 600 fell as much as 1.6%, marking its worst single-day drop since July, while noting that reports on the decline ranged between 1% and 1.6%. By our calculation, the session low of 644.72 points sits 1.55% below Thursday's close. Even so, the scale of the loss requires context: the index remains up more than 10% for the year, outperforming the S&P 500, whose 2026 gains have slipped to just over 7%. It was a correction in a market sitting near its highs rather than a collapse. Meanwhile, the payroll report, which investors had been anticipating since morning, shifted the market's focus.
What Did the Payroll Report Show, and Why Does It Matter More Than the European Drop?
The employment report came in strong, and that is precisely the problem. The U.S. economy added 165,000 nonfarm jobs in October, beating expectations of 65,000. Estimates varied across institutions: in the Projeções Broadcast survey, forecasts ranged from 40,000 to 100,000 jobs, with a median of 60,000. No individual survey came close to the actual figure.
Nearly 2.5 times Reuters' 65,000 forecast.
Down from 4.2% in September. Markets had expected stability.
August was revised from 133,000 to 186,000 jobs, and September from 29,000 to 60,000.
The U.S. economy is not cooling down as the weak September data had suggested. Earlier in October, September's reading came in soft at just 29,000 jobs, which had dampened bets on further interest rate hikes. Now the narrative has reversed. According to an analysis by ASA, the result reinforced perceptions of U.S. economic resilience and opened the door for a potential Federal Reserve rate hike in December. Our page on U.S. interest rates and the next Fed meeting tracks current rate levels and upcoming decision dates.
Higher U.S. interest rates draw capital back to the United States while pulling money out of emerging markets like Brazil. That dynamic showed up clearly in the Brazilian foreign exchange market on Friday.
If Global Markets Fell, Why Did the Ibovespa Rise?
Because the B3 has almost no exposure to the tech stocks that were being unloaded. The Ibovespa gained 1.39% on Friday to finish at 168,498.45 points, posting a 0.34% weekly gain that broke a three-week losing streak. The Brazilian benchmark index is dominated by banks, commodities, and service providers rather than chipmakers. The same logic applies to Europe. Ipek Ozkardeskaya, an analyst at Swissquote Bank, told Reuters that investors were rotating out of technology into other sectors, and out of the U.S. into other markets, following the midterms. We break down the election results and the initial market reaction in our report on who won the midterms and how markets reacted.
The U.S. dollar, however, moved in the opposite direction. Commercial dollars rose 0.36% to close at R$ 5.50, their highest level since December 2025. In the spot market, Agrolink recorded R$ 5.5115, up 0.44%. The slight difference stems from pricing methodologies, but both points indicate upward momentum. Also on Friday, Bradesco and XP revised their 2026 and 2027 forecasts, pointing to higher inflation and a sharp deceleration in economic activity. Domestic risk, which had eased since the PL recognized Lula's victory, has not yet left the foreign exchange market at peace.
If your portfolio is invested in B3 equities and real estate investment funds (FIIs), Friday's tech liquidation stayed far away. The key watchpoint is the rising dollar combined with a more hawkish Fed, as this mix tends to pressure Brazilian futures rates. Higher futures rates weigh on the pricing of brick-and-mortar FIIs and fixed-rate government bonds. Investors holding BDRs or U.S. tech ETFs felt the drop in dollar terms, but a weaker real cushioned part of the loss in local currency. None of these movements call for panic selling; they call for close monitoring.
Unresolved Questions After Friday's Session
Is the tech sell-off over? Nobody knows. Not everyone views the risk the same way: John Plassard of Cité Gestion noted that while fears over stricter AI regulations have not vanished, they are currently offset by heavy investments in data centers and resilient corporate earnings. As evidence of this resilience, French industrial firm Legrand rose 5.5% on Thursday after raising its sales guidance for the second time this year, driven by data center demand.
Is Europe becoming a safe haven? In part. Lower exposure to AI protected the continent this week. But as we pointed out in our analysis of European stocks exposed to Brazil, a rising European index guarantees nothing for local companies dependent on the Brazilian economy.
Is the payroll report definitive? No. The Bureau of Labor Statistics (BLS) notes that October figures are preliminary and subject to revision in the next two reports. September's numbers demonstrated how quickly such revisions can alter market interpretations.
U.S. Dollar: A sustained close above R$ 5.50 marks a new high since December 2025 and tends to put upward pressure on Brazilian futures rates and FIIs.
Stoxx 600: Breaking below the session low of 644.72 points would signal that the European correction is deepening. A move back above 654.87 points would erase Friday's losses.
U.S. Inflation (October CPI): An upside surprise, combined with this payroll report, would virtually confirm a Fed rate hike in December.
Payroll Revisions: If the 165,000 job gain is revised downward in the next report, the argument for higher interest rates will lose traction.