Asian stocks slump after US tech rout amid AI jitters
Concerns that Democrats in the US will push back against data center projects are weighing on an AI trade that is already on shaky footing amid growing doubts about profitability.
Asian stocks experienced a sharp decline on Friday, following a significant drop in tech stocks on Wall Street the previous day. The Japanese Nikkei 225 index fell 5.5%, while South Korea's Kospi index plummeted by as much as 8.8%, prompting a circuit breaker that halted trading for 20 minutes. Taiwan's TAIEX index also saw a decline of over 8%.
Major Asian tech companies such as Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company (TSMC) suffered heavy losses, with Samsung stocks dropping nearly 10% and SK Hynix falling over 11%. Chip-related shares in Japan also declined, with Tokyo Electron trading down around 9% and Kioxia shedding 13%. European stock futures also fell by 1%, suggesting the sell-off could spread to Europe.
The decline in US markets was primarily driven by a sharp retreat in tech stocks, particularly those involved in the development of artificial intelligence infrastructure. The tech-heavy Nasdaq fell 5.52%, while the broader S&P 500 index plunged 4.4%. This market downturn was fueled by growing investor concerns over the substantial AI spending plans and their potential for generating profits.
The US midterm elections, which resulted in Democrats gaining control of both houses of Congress, further intensified these worries. Some Democratic governors-elect, facing public opposition, had campaigned on slowing AI development and pausing data center construction. Market analyst Michael McCarthy noted a significant shift in sentiment, attributing the market's sharp swings to this change.
Written by urgent.news from DW Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
