The Nasdaq sank 5.5% as fears that Democrats' midterm victory will bring tougher scrutiny of AI hit technology stocks. The rout spread to Asia and sent investors toward bonds, while authorities in South Korea and Taiwan moved to calm trading.
The Nasdaq sank 5.5% and $3 trillion was wiped off S&P 500 firms, according to Reuters. Investors worry that Democrats, who dominated this week's midterm elections, will apply brakes to the AI boom.
Asian markets take the hit
Japan's Nikkei slumped 6%, its deepest one-day drop since April 2025. Benchmark indices in South Korea and Taiwan plunged more than 8% after the opening bell, then cut losses as authorities scrambled to stem the selling.
Taiwan stocks closed down 4.5%. For the week, the index clocked a 12.2% decline, its biggest since 1991, LSEG data showed.
Among chipmakers, Samsung Electronics and SK Hynix fell nearly 6% and 9.4% respectively. TSMC fell as much 8.5% in Taiwan before closing down 4.7%.
Margin calls and fragile sentiment
Christopher Forbes, head of Asia and Middle East at CMC Markets, spoke in the Reuters report. "It’s actually a bit of a disaster," he said. He said clients were long index and long stocks. The firm had client margin calls and complaints.
However, some analysts said the selloff was overdone. Allen Huang of Mega Financial Holding's equities trading department said further liquidation of margin accounts suggests the market is likely in the final stage of capitulation.
Sentiment remained fragile, though. Nasdaq futures were up 0.8% while European stock futures were last down 1%.
Bonds and the dollar draw haven flows
Bonds gained in Asia, with US Treasuries and government bonds in Japan and China rising. The US dollar, the Japanese yen and the Swiss franc also drew safe haven flows.
The yield on the benchmark US 10-year Treasury note stood at 4.838%, near its lowest since September 9. State Street's Masahiko Loo said the moves look more like a reassessment of AI policy risk than of the AI cycle.
Source: Investing.com (Reuters)
Trading involves risk.
Risk Disclaimer
