Chip and data centre stocks fell across Asia on Thursday after Democratic midterm wins, while broader indexes rose. Investors fear greater scrutiny of AI infrastructure, and hopes for an end to the US-Iran war pushed oil lower.
South Korea's chipmaker-heavy KOSPI sank nearly 6% on Thursday after US voters swept the Democrats to a series of midterm election wins. Taiwan's benchmark index fell over 3%, putting it on track for an 8% weekly decline, its worst weekly performance since April 2025.
Tech slides while broad markets rally
The market reaction diverged. The S&P 500 closed 1.6% higher and European shares hit a two-month high, but tech stocks struggled as investors feared tougher scrutiny of the AI infrastructure build-out.
Nasdaq futures slid 1%, which Reuters read as investor angst over chip and data centre stocks. In Japan, tech equipment suppliers dragged the Nikkei down 2%, while the broader Topix rose 0.8%.
Data centre opposition gains ground
Democratic candidates who campaigned partly on moratoriums on data centre construction won in Texas and Georgia. Shares in data centre companies and their equipment suppliers across Asia fell on expectations of tougher regulation.
Masahiko Loo, chief fixed income strategist at State Street Investment Management, said Democratic control raises the prospect of tougher scrutiny around data centres, power demand and consumer costs. He added that President Donald Trump retains veto power. According to Loo: "raises the political risk premium around US AI", without necessarily derailing the broader AI capex cycle.
Oil drops on hopes of an end to the Iran war
Traders bet that Trump, facing a Democratic Congress and hurt by high energy prices, would be less likely to escalate the war with Iran. Brent crude dived nearly 9% overnight and fell below $100 a barrel. It was testing overnight lows at $94.21 on Thursday.
Reuters noted that a resolution could push oil lower still, easing inflation pressure and reducing the likelihood of future interest rate hikes. The 10-year Treasury yield fell to 4.85%, a two-month low, and the dollar slipped to a one-month low of $1.1273 per euro.
Source: Investing.com (Reuters)
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