Oil and data centre stocks sink after US midterms

Oil, chip stocks, and the dollar experienced pressure in Asia on Thursday following US voters' overwhelming wins in the midterm elections. These gains for Democrats fueled hopes for an end to the US-Iran war. Brent crude futures plummeted nearly 9%, slipping below $100 a barrel, marking the largest weekly drop since April 2020. This decline in energy prices boosted bond yields, weakened the dollar, and supported stocks.

The S&P 500 closed 1.6% higher and European shares reached a two-month high. Solar supply chain stocks soared, anticipating increased Democratic support for renewables, while data center companies and their equipment suppliers in Asia saw their shares fall due to fears of stricter regulation. South Korea's KOSPI, dominated by chipmakers, declined 4% and was close to a seven-month low in early trading.

Taiwan's benchmark index slipped 1.8%. Tech equipment suppliers impacted the Nikkei, which fell 0.5%. Some analysts believe the election results may temporarily slow AI, data center, and chip demand; however, most expect these sectors to maintain resilience.