Technology shares plunged on Friday after an unnerving rout on Wall Street as fears grew that Democrats would accelerate a backlash against AI after their crushing defeat of President Donald Trump’s Republicans in the US midterms.
asserted
Democrats → plunge → midterms
The Tokyo and Seoul stock markets closed out their weeks with losses of six per cent following the Nasdaq’s 5.5pc collapse on Thursday, its worst showing since April last year when Trump unveiled his wide-ranging global tariffs.
asserted
Trump → close → tariffs
“The tech sell-off has intensified, with the pain of the brutal sell-off on Wall Street carried straight through to Asia and knocking sentiment in Europe,” said Susannah Streeter, chief investment strategist at Wealth Club.
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Streeter → intensify → Club
“Big worries are colliding — the build-out of data centres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment,” she said.
asserted
she → collide → investment
The London, Paris and Frankfurt stock markets shed around 2pc nearing the halfway stage despite featuring few technology firms.
asserted
markets → shed → firms
Elsewhere, the dollar firmed before key US jobs data on Friday, and oil prices steadied following steep declines this week.
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prices → firm → declines
Futures contracts pointed to a rebound on the Nasdaq later this afternoon, but further declines for the broad-based S&P 500.
asserted
contracts → point → S&P
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.
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winners → face → projects
Analysts said investors were also spooked by a call from progressive US Senator Bernie Sanders for a national moratorium on their building.
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investors → say → 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.
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spike → compound → position
Bloomberg said the Philadelphia Semiconductor Index had collapsed around 16pc this week, putting it on course for its worst run since April last year.
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Index → say → April
On Seoul’s Kospi stocks index, chip giant SK hynix slumped 10pc and its rival Samsung lost 6.4pc.
asserted
Samsung → slump → 6.4pc
The Kospi more than doubled in value between the end of December and mid-June, when it hit a record, but is down almost 50pc over the past four and a half months.
asserted
it → double → months
“The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone,” said Dong Baozhen, chairman of asset manager Lingtong Shengtai.
“The US stock market has been the standard-bearer and backbone of the global AI bull run.
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market → show → run
Now that backbone has snapped.
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backbone → snap → ?
Can AI bull markets elsewhere hold up on their own?”
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markets → hold → own
Tokyo dived 6pc on Friday as Japanese tech investor SoftBank gave back more than 10pc, while chipmaker Kioxia collapsed 8.7pc and semiconductor tester Advantest retreated 5pc.
asserted
Advantest → dive → 10pc
A 4.7pc drop for Taiwanese chip giant TSMC dragged down Taipei’s Taiex.
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drop → drag → Taiex
“The blood is in the streets, folks,” wrote Neil Wilson, analyst at Saxo Markets, though he added that the sell-off looked “overdone”.
“The fear is a total momentum unwind as Democrats pace the frontier and kibosh data centre build-out,” he said.
asserted
he → write → out
crude: Down 0.1pc at $98.20 per barrel
West Texas Intermediate: Up 0.1pc at $90.64 per barrel
Euro/dollar: Down to $1.118 from $1.122 on Thursday
Pound/dollar: Down to $1.340 from $1.345
Dollar/yen: Up at 158.24 yen from 157.83 yen
Euro/pound: Up at 83.44 pence from 83.41 pence
Sentiment shifts, cracks emerge
Investor fear also centred on whether a stalling AI infrastructure expansion could hurt smaller firms whose capacity to raise funds has already been limited by higher interest rates and tighter financial conditions.
uncertain
capacity → shift → rates
Neocloud firm CoreWeave, which has become a barometer of investor anxiety over heavy AI spending and borrowing, slumped 10pc, while its five-year credit default swap spreads widened to a record level.
“It’s pretty clear there’s been a real shift in sentiment,” said Michael McCarthy, chief executive for Australia and New Zealand at brokerage Moomoo.
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McCarthy → become → Moomoo
The selling indicates investors are starting to factor in increased local opposition to data centres, with analysts saying markets have yet to fully consider the cost such building has imposed on communities.
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building → indicate → communities
Still, some analysts said the selloff was overdone and the bottom was not far off.
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bottom → say → ?
“Today we are bound to see further liquidation of margin accounts, which suggests we are likely in the final stage of capitulation,” said Allen Huang, a vice president of Mega Financial Holding’s equities trading department.
uncertain
Huang → bind → department
“Even TSMC hit its daily limit down circuit breaker at one point, which typically marks the tail end of a downturn.
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which → hit → downturn
When TSMC gets sold off, that means all stocks have been thoroughly dumped,” Huang said.
asserted
Huang → sell → ?
The Aporia
