European Markets Stumble Amid AI Advances and Economic Data Countdown

European shares declined as low-cost AI tech from China spurred concerns about competitor profits, impacting the tech sector. The STOXX 600 and U.S. Nasdaq futures both suffered losses. Upcoming central bank decisions and economic data for Europe will also impact market movements.

On Monday, European shares experienced a downturn as the technology sector joined a broader market retreat. This slump followed the rollout of a new, upgraded low-cost artificial intelligence model from China, raising concerns over potential profit margins for competitors and highlighting the increasing costs associated with advanced technology.

The pan-European STOXX 600 index slid by 0.7% as of 0815 GMT. U.S. markets mirrored this downtrend, with Nasdaq Composite futures plummeting by 3.1% and S&P 500 futures falling by 1%. Contributing to the shakeup, startup DeepSeek released a free AI assistant using economical chips and less data, challenging recent financial assumptions about AI demand's global supply chain reverberations.

This news caused a ripple effect in European tech stocks, which dropped by 4.5%. Among the hardest hit were chip equipment manufacturer ASML, down 8.7%, along with Siemens Energy and Schneider Electric, dropping 17.7% and 8.1% respectively. As the week progresses, markets are set to watch for central bank rate announcements and crucial GDP and inflation data from major European economies.

(With inputs from agencies.)