Tech stocks plunge as US midterm results fuel fears of tighter AI rules

Tech stocks plunge as US midterm results fuel fears of tighter AI rules Asian tech stocks fell sharply on Friday, with Seoul and Tokyo leading losses after a Wall Street sell-off driven by fears of tighter AI regulation following Democrats’ US midterm election victory. Many winning candidates pledged to curb data centre development amid opposition to the projects from across the political spectrum. Asian tech firms suffered a bloodbath Friday as investors tracked a collapse on Wall Street fuelled by fears that Democrats will ramp up regulations of the AI industry following their blowout victory in this week's US midterm elections. Trading boards were a sea of red in early business, with Seoul and Tokyo taking the brunt of the selling as traders fled to the hills amid uncertainty about a sector that had pushed stock markets to record highs just five months ago. While the historic "blue wave" in Tuesday's vote had been initially welcomed on hopes it could put pressure on President Donald Trump to wind down his war against Iran, fears about the impact on the AI buildout soon came to the fore. Data centres have faced broad opposition from US voters across the political spectrum, and many midterm winners have pledged to put the brakes on such projects. Analysts said investors were also spooked by a call from progressive US Senator Bernie Sanders for a national moratorium on their building. The results compounded already heightened fears about the hundreds of billions firms had pumped into the sector and when they would see a return, while the recent spike in borrowing costs also fuelled concerns about their financial position. The eye-watering rally in many companies' valuations had also caused unease on trading floors. Michael Hewson at MCH Market Insights said investors were selling up because of "concerns that we might see greater opposition to AI buildout plans, with the results in Texas prompting concerns that politicians in the state might target Elon Musk's Tesla and SpaceX due to his support for Trump". New York's Nasdaq plunged 5.5 percent in its worst day -- percentage-wise -- since April last year when Trump unveiled his wide-ranging global tariffs. The S&P 500 tanked more than four percent and the Dow more than three percent. Read moreUS midterms: 'Donald Trump's wings have been more than clipped' Bloomberg said the Philadelphia Semiconductor Index had collapsed around 16 percent this week, putting it on course for its worst run since April last year. Trump blamed the collapse on the Democrats, writing on Truth Social: "The Stock Market crashed today because the Dumocrats had a big Tuesday - So sad to see, you only have yourselves to blame! President DONALD J. TRUMP." The heavy selling continued in Asia. Seoul plunged almost nine percent at one point, with chip giant SK hynix off 10 percent while rival Samsung was eight percent down. The Kospi more than doubled between the end of December and mid-June, when it hit a record, and has since then lost almost 50 percent. Tokyo dived seven percent as Kioxia and SoftBank gave back more than 10 percent, with Advantest more than eight percent lower. TSMC's seven-percent drop dragged Taipei's Taiex around eight percent lower. Hong Kong, Shanghai, Sydney and Singapore were all down more than one percent, with Wellington and Manila also in the red. "The blood is in the streets, folks," said Neil Wilson at Saxo Markets. "The fear is a total momentum unwind as Democrats pace the frontier and kibosh data centre buildout... this looks totally overdone but the nature of sell-everything of this market means we need to look for some stability first." The mood was also dampened by a fresh lift in oil prices, extending Thursday's gains after plunging on the midterm results amid hopes for an end to the Iran war. Traders were keeping eyes on developments in the crisis after US and Iranian leaders had indicated progress earlier in the week. US jobs data is also due later in the day, following broadly positive readings earlier in the week. (FRANCE 24 with AFP) Keywords for this article [Image text:] MPE R26/11/69:49 57308.77 ma 3769.13-6.17 NQN MPRES 11293 Bt 11/6 09:49 C.uick 3689.9109 +3.7384 51523.06 -1833.06 Nifty 50 PSEi 24536.60 +576.00 NASDAQ 24314.997 -1421.516 0941NQN*-X