Nov 6 (Reuters) – Stock markets were tumbling as fear gripped investors that the Democratic sweep at the midterm elections would lead to regulation and a slowdown of the AI boom that has been propelling US growth and computer component supply chain stocks all over the world.
The Nasdaq fell 5.5% on Thursday in the biggest drop since the tariff-triggered “Liberation Day” rout in 2025.
On Friday in Asia trade in Seoul was halted after the open when stocks plunged 8%, and in Tokyo the Nikkei slumped more than 6%. [MKTS/GLOB]
Here’s what market participants are saying:
ALLEN HUANG, VICE PRESIDENT, MEGA FINANCIAL HOLDING EQUITIES TRADING DEPARTMENT:
“Today we are bound to see further liquidation of margin accounts, which suggests we are likely in the final stage of capitulation.
“Even TSMC hit its daily limit-down circuit breaker at one point, which typically marks the tail end of a downturn. When TSMC gets sold off, that means all stocks have been thoroughly dumped.”
STEVE SOSNICK, CHIEF STRATEGIST, INTERACTIVE BROKERS, NEW YORK:
“Investors had already begun to question whether all the copious AI spending would reap sufficient returns to justify billions in debt and equity capital.
“When a group of stocks is heavily owned, priced to perfection, and critical to the bull market’s thesis, there is not much room for error if their fundamentals appear threatened.
“After damage like the sort we’ve been facing, it is difficult to think that we simply can bounce from here. We may be oversold in the short term, but the underlying questions and causes can’t simply be wiped away.”
SHANE OLIVER, CHIEF ECONOMIST AND HEAD OF INVESTMENT STRATEGY, AMP, SYDNEY:
“Investors are trying to grapple with what the Democrat win might mean and they don’t fully know yet. It attests to the broader concern that tech and AI-related trades were trading on relatively high multiples and that left them vulnerable. That concern had been building for a while now, and you could argue that the midterms provided the trigger for a pullback.
“It’s too early to say the markets have bottomed, but providing the economic outlook is unaffected, it’s probably going to be more of a correction than a bear market.”
GEORGE BOUBOURAS, HEAD OF RESEARCH, K2 ASSET MANAGEMENT, MELBOURNE:
“The AI and tech selloff, which began a few months ago on both valuation metrics and impact to free cash flow, has now accelerated on the prospect that the US data centre rollout will be impacted by the change in the Senate and House following the midterms.
