Global Markets Reel After US Election Tech Sell-Off
Markets experienced a sharp sell-off in technology shares driven by anxieties that the Democratic victory in the US midterm elections would lead to heightened oversight of artificial intelligence and decelerate data centre expansion, prompting investors to seek refuge in bonds. Wall Street’s volatility fear gauge soared overnight as the Nasdaq sank 5.5% and $3 trillion was wiped off S&P 500 firms, according to rte.ie.
An artificial intelligence trade, already standing on shaky ground due to concerns over returns on massive investments in AI-related infrastructure, was rattled by these political anxieties. The meltdown spurred margin calls and spooked retail investors and hedge funds alike. It’s actually a bit of a disaster,
said Christopher Forbes, head of Asia and Middle East at CMC Markets.
Forbes noted the emotional toll on market participants. (Clients) were long index, long stocks, and they all got carried out,
he explained. All night, all day – we had client margin calls, client complaints because it’s a very emotional thing? People are wedded to their positions and views on a stock or outcome and you’re telling them, look, you’ve just lost money.
CNBC added that the Nasdaq closed more than 10% below its recent high, landing squarely in correction territory.
In a very ugly session for tech, the NASDAQ is now down a full 5%, pulling down the S&P 500 by 4% and the Dow by 3%. (CNBC chart below.)#economy #stocks #markets pic.twitter.com/LqSqU2KUqM
Asian Exchanges Suffer Deepest Losses in Decades
Japan’s Nikkei index slumped 6%, marking its deepest one-day drop since April 2025, according to rte.ie. Following the opening bell, South Korean and Taiwanese leading share price indices also tumbled by over 8% prior to paring their losses as authorities stepped in to curb the heavy selling. Irish Examiner noted that the Nikkei fell below the 60,000 point level for the first time since May.
By the Asian afternoon, stocks cut some losses as authorities worked to soothe nerves. South Korean Finance Minister Lee Hyoung-il temporarily eased rules on retail investors' borrowed-money investments. Officials at Taiwan’s Ministry of Finance reached out to top executives at state-run banks during the morning hours, directing them to provide market support, according to multiple sources who spoke with Reuters.
When the Nasdaq sneezes… The South Korean and Japanese stock markets tumble 6% in the wake of the US selloff.#markets #stocks #japan #korea #investing #investors
Taiwan stocks closed down 4.5%, recovering somewhat from their early morning slump. For the week, the index clocked a 12.2% decline, its biggest since 1991, LSEG data showed. Korean AI chipmakers Samsung Electronics and SK Hynix fell nearly 6% and 9.4% respectively, while TSMC fell as much as 8.5% in Taiwan before closing down 4.7%. Kioxia dropped 11% and the AI-focused investor SoftBank Group tumbled 11% in Japan, while the cost of insurance against the Japanese company’s debt default surged to a four-year peak.
The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone,
said Dong Baozhen, chairman of asset manager Lingtong Shengtai, as reported by rte.ie. The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped. Can AI bull markets elsewhere hold up on their own?
European Shares Fall Amid Global Market Rout
As the worldwide market sell-off intensified, European equities also drifted downward with widespread losses, sealing a difficult week as investors wrestled with uncertainty surrounding AI stocks following the Democratic takeover of the US Congress. London’s FTSE was down 1.4%, the Paris CAC dropped 1%, and the Frankfurt DAX lost 1.3% in morning trade, while Dublin’s ISEQ index shed 0.6%, rte.ie reported.
CNBC noted that the regional Stoxx 600 index was down 1.7% in morning London trade, putting it on course for its worst session since March. Despite the regional downturn, big chip names such as ASML and ASMI managed to buck the trend locally, rising 4% and 3% respectively.
After damage like the sort we’ve been facing, it is difficult to think that we simply can bounce from here,
said Steve Sosnick, chief strategist at Interactive Brokers. We may be oversold in the short term, but the underlying questions and causes can’t simply be wiped away.
Investor Fears Grow over Stalling Infrastructure Expansion
Concerns among investors also focused on whether a slowdown in artificial intelligence infrastructure development could negatively impact smaller companies, whose fundraising abilities are already constrained by elevated interest rates and stringent financial environments. AI cloud computing provider CoreWeave slumped 10%, while its five-year credit default swap spreads widened to a record level.
The selling indicates investors are starting to factor in increased local opposition to data centres. Analysts say markets have yet to fully consider the cost such building has imposed on communities. Citing the consequences for rural areas, incoming Texas Governor Gina Hinojosa announced that the state will propose legislation aimed at safeguarding residents regarding data centres.
Some analysts suggested the selloff was overdone and the bottom was near. Today we are bound to see further liquidation of margin accounts, which suggests we are likely in the final stage of capitulation,
said Allen Huang, a vice president of Mega Financial Holding’s equities trading department. Even TSMC hit its daily limit down circuit breaker at one point, which typically marks the tail end of a downturn. When TSMC gets sold off, that means all stocks have been thoroughly dumped.
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