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

Asian technology stocks tumbled on Friday, extending a Wall Street rout as investors assessed the potential impact of the Democrats’ sweeping victory in the US midterm elections on the artificial intelligence industry.

Seoul and Tokyo bore the brunt of the sell-off, with investors retreating from chipmakers and other technology firms amid concerns that political opposition could slow the expansion of AI infrastructure.

The sharp losses come just five months after technology stocks helped drive global markets to record highs.

The Democrats’ historic victory on Tuesday was initially welcomed by investors hoping it would increase pressure on US President Donald Trump to end the war against Iran.

However, attention soon shifted to the potential impact on AI investment. Data centre projects face opposition from voters across the political spectrum, while several midterm election winners have pledged to curb their expansion.

Investors were also unsettled by progressive US Senator Bernie Sanders’ call for a national moratorium on new data centre construction.

The concerns add to existing questions about the hundreds of billions of dollars companies have invested in AI and when they might generate returns. Rising borrowing costs and stretched company valuations have also weighed on sentiment.

Michael Hewson of MCH Market Insights said investors were concerned that political opposition could increase, including in Texas, where election results raised questions about possible action against Elon Musk’s Tesla and SpaceX over his support for Trump.

The sell-off gathered pace in the US on Thursday, with the Nasdaq plunging 5.5 per cent in its worst percentage drop since April 2025, when Trump announced sweeping global tariffs.

The S&P 500 fell more than 4 per cent, while the Dow Jones Industrial Average lost over 3 per cent.

The Philadelphia Semiconductor Index was also on course for its worst weekly performance since April 2025, having fallen about 16 per cent, according to Bloomberg.

Trump blamed the market decline on the Democrats’ election gains, writing on Truth Social that the market had crashed because the party had a successful Tuesday.

The heavy selling continued across Asia on Friday.

South Korea’s Kospi plunged nearly 9 per cent at one point, with chipmaker SK hynix falling 10 per cent and Samsung Electronics losing 8 per cent.

The index had more than doubled between the end of December and mid-June, when it reached a record high, but has since surrendered almost half its value.

Japan’s Nikkei 225 dropped 6 per cent, with Kioxia and SoftBank losing more than 10 per cent each. Advantest fell over 8 per cent.

In Taiwan, TSMC’s 7 per cent decline dragged the Taiex down around 8 per cent.

Hong Kong, Shanghai, Sydney and Singapore also traded lower, while Wellington and Manila were in the red.

The mood was further dampened by rising oil prices, extending gains from Thursday after crude had initially fallen following the US election results.

Investors had hoped the outcome would increase pressure on Trump to end the Iran war, but continued uncertainty over the conflict kept markets on edge.

Traders were also watching developments in the crisis after US and Iranian leaders indicated earlier in the week that progress had been made.

US jobs data due later on Friday was another focus for investors.

At around 0200 GMT on Friday

The broad sell-off highlights growing investor uncertainty over the outlook for AI spending, data centre expansion and the wider technology sector, as political and economic risks weigh on global markets.