Asian markets follow US plunge as AI stocks face fresh sell-off

Asian stock markets fell sharply on Friday, following a heavy sell-off on Wall Street as growing concerns over artificial intelligence (AI) investments rattled global investors.

Japan's benchmark Nikkei 225 plunged 6.2% in morning trading to 57,271.19, while South Korea's Kospi dropped 7.1% to 5,000.25. Australia's S&P/ASX 200 also declined 0.7% to 9,003.40.

The losses followed a brutal session on Wall Street on Thursday, when major US stock indexes suffered their steepest declines in months, led by a sell-off in companies linked to AI and data centre investments.

The S&P 500 plunged 4.4% on Thursday, marking its worst daily performance since April 2025, when US President Donald Trump's 'Liberation Day' tariffs triggered widespread market turmoil.

The Dow Jones Industrial Average dropped 1,833.06 points, or 3.4%, to 51,523.06, while the Nasdaq Composite tumbled 5.5% to 24,315.

The Nasdaq, which has significant exposure to technology and AI-related companies, is now 11.9% below its record high reached last month. A decline of more than 10% from a recent peak is commonly described as a market correction.

The latest losses wiped out Wall Street's gains from Wednesday, which had marked its strongest session in three months.

Companies that have benefited from the AI boom came under renewed pressure as investors questioned whether massive spending on data centres can continue at its current pace.

Concerns have been growing over the high cost of borrowing to finance new data centre projects, while critics argue that valuations of AI-related stocks had climbed too far, raising fears of a market bubble.

Nvidia, one of the biggest beneficiaries of the AI boom, fell 9.3% on Thursday, making it the heaviest drag on the S&P 500. The chipmaker is now down 2.6% so far this year, following annual gains of around 39%, 171% and 239% over the previous three years.

Other major AI-linked stocks also suffered:

AI chipmakers have become some of the largest and most influential companies on Wall Street, meaning their share price movements can have an outsized impact on broader market indexes.

The latest US midterm election results have added another layer of uncertainty for technology investors.

Democratic victories across the country raised concerns that governments could push for restrictions or pauses on new data centre construction.

Voters from both major political parties have expressed concerns about AI and rising electricity bills linked to the growing power demands of data centres.

Any slowdown in data centre construction could affect demand for AI chips, electricity and other products and services supporting the technology boom.

Oil prices also moved higher amid continued uncertainty over the war with Iran and its impact on global energy supplies.

Brent crude, the international benchmark, rose 3.88% to $98.29 a barrel, recovering part of its nearly 9% decline in the previous session.

US benchmark crude gained 0.60% to $91.06 a barrel.

US Treasury yields continued to fall as investors sought safer assets amid the stock market turmoil.

The yield on the 10-year Treasury declined to 4.84% on Thursday, down from 4.90% late Wednesday. It had stood at 4.95% on US election night and above 5.30% last month.

The decline came despite encouraging economic data, including a drop in the number of Americans filing for unemployment benefits.

In currency markets, the US dollar edged higher against the Japanese yen, trading at 157.83 yen compared with 157.65 yen previously. The euro was little changed at $1.1216.