Hong Kong – Tech firms tumbled Thursday as investors contemplated the outlook for the AI boom after Democrats swept the US midterms, partly on the back of growing anger over the rapid building of data centres across the country.
However, broader markets mostly rallied and oil plunged after Donald Trump’s Republicans were dealt a historic defeat that was blamed on high prices, tariffs and the Iran war.
The result stoked hopes he will look to wind down the Middle East conflict, which would help temper inflation, and even soften his stance on trade.
But AI-linked firms came under the cosh amid fears for planned data centre construction projects as well as renewed scrutiny from newly installed Democrats on Capitol Hill.
The sector had already been in the crosshairs of investors owing to questions about the vast sums pumped into new facilities, R&D and chip development, and when any companies would see a profit.
Charu Chanana at Saxo Markets said the vote was accelerating a reassessment of AI that was already under way.
“A Democratic Congress introduces another layer of uncertainty: regulatory scrutiny,” she wrote, adding that the three main risks were more oversight, data centre restrictions and capital spending uncertainty.
“The congressional scrutiny could accelerate demands for AI safety standards, independent model evaluations and greater accountability for data centre developers,” she added.
However, she also said: “This is not the same as an outright anti-AI policy agenda. AI is strategically important for US competitiveness, particularly against China, and there remains considerable bipartisan interest in maintaining American leadership.”
Chip firms were hammered in Asia, with South Korea’s SK hynix off more than seven percent and Samsung 5.5 percent down.
Tokyo-listed Kioxia and Advantest shed nine percent, Tokyo Electron more than seven percent and SoftBank five percent.
US Nasdaq futures fell more than one percent.
Broader markets performed better as investors rotated into other sectors including finance and manufacturing names.
Seoul, the poster child of the AI-led surge in the first half of the year, shed around four percent, while Taipei lost almost two percent. Tokyo also fell.
But there were healthy gains in Hong Kong and Shanghai, helped by hopes for an easing of trade tensions between the US and China, with tech titans including Alibaba, JD.com and Tencent.
Sydney, Singapore, Wellington and Manila also advanced.
Oil continued to fall after diving more than eight percent Wednesday on the US result amid optimism Trump will seek a deal to end the Iran war, which has been a key driver of the inflation spike that has hammered US consumers.
Hopes were given a boost when Vice President JD Vance said in a social media post that the Republican defeat was due to the unpopularity of the eight-month-old conflict.
The drop in crude prices — both main contracts are now below $100 for the first time since the start of October — has also tempered inflation worries and in turn Treasury yields, which dipped again Thursday.
The lower cost of borrowing has also been helped by the prospect that gridlock on Capitol Hill would lead to less spending.
That also weighed on the dollar, which held losses against its peers in Asian trade.
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: DOWN 0.4 percent at 61,913.51 (break)
Hong Kong – Hang Seng Index: UP 3.1 percent at 24,665.84
Shanghai – Composite: UP 0.2 percent at 3,695.09
West Texas Intermediate: DOWN 0.4 percent at $87.80 per barrel
Brent North Sea crude: DOWN 0.1 percent at $94.56 per barrel
Euro/dollar: UP at $1.1250 from $1.1229 on Wednesday
Pound/dollar: UP at $1.3485 from $1.3473
Dollar/yen: DOWN at 158.01 yen from 158.49 yen
Euro/pound: UP at 83.43 pence from 83.35 pence
New York – Dow: UP 3.0 percent at 53,356.12 (close)
London – FTSE 100: UP 1.8 percent at 10,829.21 (close)
