Technology stocks suffered sharp losses on Friday, as investors followed a decline on Wall Street fueled by fears that Democrats will tighten regulations on the artificial intelligence sector after their sweeping victory in the US midterm elections this week. Stock markets saw sharp declines in early trading, particularly in Seoul and Tokyo, as investors rushed to sell off technology shares due to concerns about the future of artificial intelligence, which had propelled stock markets to record highs just five months earlier. Although the Democratic victory in Tuesday's elections initially excited investors, amid hopes that President Donald Trump would push for an end to the war with Iran, fears quickly arose that the victory would hinder expansion plans for AI projects. Data centers faced widespread opposition from American voters regardless of party affiliation, and many of the midterm winners pledged to work to curb these projects. The results exacerbated existing concerns. Regarding the hundreds of billions of dollars that companies have poured into the sector, and when they will begin to see returns on their investments, the recent rise in borrowing costs has raised further concerns about their financial health. Michael Hewson of MCH Market Insights said investors are selling their shares due to "fears that AI expansion plans may face greater opposition, as the Texas election results have raised concerns that politicians in the state might target Elon Musk's Tesla and SpaceX because of his support for Trump." The Nasdaq in New York fell 5.5%, its worst daily percentage performance since April of last year, when Trump announced sweeping global tariffs. The S&P 500 fell more than 4%, while the Dow Jones lost more than 3%. Bloomberg reported that the Philadelphia Semiconductor Index has fallen nearly 16% this week, heading for its worst weekly performance since April of last year. - Trump blames Democrats Trump blamed the Democrats, writing on his Truth Social platform after the US financial markets closed, "The stock market crashed today because the Democrats had a big win on Tuesday (...) Sad to see, blame yourselves." The sharp sell-off extended to Asian markets. Seoul's index briefly plunged nearly 9% before closing down 6%, with shares of chip giant SK Hynix losing more than 10%, while its rival Samsung fell 6.4%. The Kospi index had more than doubled between the end of December and mid-June, when it hit a record high, before losing about 50% of its value since then. In Tokyo, the main index fell 6%, with SoftBank shares dropping more than 10%, Kioxia shares down 8.7%, and Advantest shares down 5%. The decline in shares of Taiwanese semiconductor manufacturer TSMC also contributed to the market's woes. The Taipei Taix index in Taipei fell by a similar percentage, dropping 4.7%. Stock exchanges in Hong Kong, Shanghai, Sydney, Singapore, Jakarta, Bangkok, Wellington, and Manila also recorded losses. In Europe, the London, Paris, and Frankfurt stock exchanges all opened down by more than 1%. Sentiment was also affected by rising oil prices, which continued their gains from Thursday after a sharp drop following the midterm elections, amid hopes of ending the trade war with Iran. Traders are awaiting developments in the crisis after US and Iranian leaders indicated progress earlier this week. Investors are also anticipating the release of US jobs data later on Friday, following generally positive indicators earlier in the week.
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