LONDON, November 21, 2025 – European stocks fell on Friday as a sharp decline in tech shares, coupled with concerns over a more hawkish Federal Reserve, weighed on investor sentiment. Meanwhile, defence stocks slipped amid early signs of potential progress toward ending the Russia-Ukraine war, while food and beverage stocks bucked the trend with gains.

The pan-European STOXX 600 index (.STOXX) dropped 0.9% to 558.93, marking its lowest level since early October. Germany’s DAX (.GDAXI) slid to a six-month low, while France’s CAC 40 (.FCHI) fell to a one-month trough.

Tech Sector Retreats

Technology shares suffered the steepest losses, dropping 2.6% overall. AI-focused companies such as Schneider Electric (SCHN.PA) and Siemens Energy (ENR1n.DE) fell 2.6% and 9.3%, respectively, as worries of an AI valuation bubble resurfaced.

Thursday’s global rally, triggered by Nvidia’s upbeat forecasts, proved short-lived after a mixed U.S. jobs report raised doubts over the Federal Reserve’s upcoming December interest rate decision.

“I prefer now that investors in the market are questioning things than a few months ago when it seemed like there were no worries, when there still were risks in the market. But hopefully we think it’s going to be temporary,” said Anthi Tsouvali, Multi-Asset Strategist at UBS.

The STOXX 600 is on track for weekly losses of nearly 3%, its largest drop since the late March–early April sell-off triggered by U.S. tariff announcements. Meanwhile, the investor nervousness index (.V2TX) jumped 3 points to 25.09, the highest since mid-May.

Defence Stocks Weaken on Geopolitical Developments

Europe’s defence sector (.SXPARO) fell 3.1%, reflecting investor caution amid reports of a U.S.-drafted plan for Ukraine, which could involve military downsizing and territorial concessions. Key companies like Renk (R3NK.DE) and Rheinmetall (RHMG.DE) saw shares drop 9.3% and 6.1%, respectively.

Corporate Highlights and Sector Performances

• Veolia (VIE.PA) lost 1.2% after agreeing to acquire U.S. hazardous waste company Clean Earth from Enviri for $3 billion.
• Food and beverage stocks (.SX3P), considered defensive in times of market uncertainty, rose 1%.
• Ubisoft (UBIP.PA) surged 12% following second-quarter net bookings that exceeded guidance and debt-reduction plans. Shares had been suspended for a week due to a delayed earnings release.
• CTS Eventim (EVDG.DE), the German ticketing firm, climbed 8% after reporting strong quarterly results.

Analysts noted that investors are increasingly cautious as concerns over US Federal Reserve policies, AI market valuations, and geopolitical risks create volatility in European equity markets.