Chip stocks crash, Kospi halts, Europe pulls back

Dubai: Wall Street suffered its worst session since April 2025 on November 5. An AI and chip sell-off wiped out the post-election rally and pushed the Nasdaq into a correction.

The Dow Jones Industrial Average fell 1,833.06 points, or 3.44 per cent, to 51,523.06. The S&P 500 dropped 4.36 per cent to 7,353.73. The Nasdaq Composite lost 5.52 per cent to 24,315, closing 11.9 per cent below its October 6 record. The Nasdaq-100 sank 6.36 per cent to 26,629.81.

All 11 S&P 500 sectors ended lower. Nvidia fell about 9.3 per cent, and the Philadelphia Semiconductor Index plunged more than 12 per cent.

The evidence points to politics, not demand. Democrats won both chambers of Congress and key governorships, including Texas. Enrico Chinello of Julius Baer’s Next Generation Research outlines the risk as “more scrutiny and marginally slower, costlier data-centre approvals”, mainly at state and local level.

Texas holds the largest US data-centre pipeline. Governor-elect Gina Hinojosa has pledged a moratorium on new approvals until lawmakers pass protections. Her Republican predecessor already paused new grid connections in August, pending an audit due in December.

Madhur Kakkar, Founder and CEO of Elevate Financial Services, calls the sell-off “a repricing of US build out timelines rather than of AI demand itself”. Chinello adds that demand is still outstripping supply across the AI ecosystem.

Chinello says the gut reaction overstates federal risk. Democrats lack a veto-proof majority, so they cannot pass sweeping AI legislation without White House approval. Support for US AI leadership also remains bipartisan.

The spending numbers have not changed. Hyperscalers should still invest more than $1 trillion (Dh3.67 trillion) a year through 2028. Data-centre projects under construction have reached 80 GW, with a further 430 GW in the pipeline. Julius Baer keeps its constructive view on cloud computing and AI.

Price action is less comforting. Valecha flagged 28,000 on the Nasdaq-100, near its 200-day moving average, as key support. The index closed well below it. The S&P 500 also finished beneath its election-night low near 7,460. Kakkar, sees an upside for the Gulf because slower US expansion strengthens the case for the UAE and wider GCC, where sovereign capital and energy resources already back AI investment.

Tokyo took the brunt. The Nikkei 225 fell more than 6 per cent at the open and trimmed losses to 5.7 per cent, trading at 57,576.63 by midday. That leaves it about 20 per cent below its 52-week high of 72,366.34.

South Korea fared worse. The Kospi dropped 8.55 per cent early, triggering a circuit breaker, and later traded 7.4 per cent lower at 4,985.99. Samsung Electronics shed 7.9 per cent in morning trade.

Elsewhere, the damage was smaller. Singapore’s Straits Times fell 2.3 per cent. Shanghai lost 1.1 per cent, Hong Kong’s Hang Seng slipped 0.6 per cent to about 24,649, and Australia’s ASX 200 declined 1.0 per cent. Brent crude near $100 (Dh367) a barrel added to the pressure.

India’s Sensex rose 700 pts, Nifty is nearing 24,700. Indian markets are defying weak global cues and cruising along on November 6.

European shares started strongly, then reversed once Wall Street opened. The pan-European Stoxx 600 closed 0.38 per cent lower at 654.87 after rising as much as 0.8 per cent near a record. Technology stocks fell 3.2 per cent, their lowest in almost two months.

Chipmakers led the retreat. ASML lost 6.6 per cent and Siltronic slid 12.3 per cent. UBS’s index of European semiconductor stocks fell 8.6 per cent. The Euro Stoxx 50 closed 0.55 per cent lower at 6,231.54, while Amsterdam’s AEX dropped 0.62 per cent to 1,129.22.

National markets diverged. Germany’s DAX hit a record, then ended 0.43 per cent lower at 26,325.01. France’s CAC 40 gained 0.3 per cent.

The FTSE 100 closed 0.43 per cent lower at 10,782.66, having touched 10,948.24 earlier. The Bank of England raised Bank Rate by 25 basis points to 4 per cent, its first increase since August 2023. The Monetary Policy Committee voted 8-1, with Catherine Mann backing 4.25 per cent. The FTSE 250 fell 0.9 per cent to 24,701.98.