Chip-centered Korean market reels after AI-skeptical Democrats sweep US midterms

Financial markets experienced a mixed reaction on Thursday following the Democratic Party's victory in both US congressional chambers during the midterms. While some investors hoped the Democrats might curb President Trump's trade and fiscal policies, concerns over a potential government shutdown loomed. Speculation about new restrictions on data center construction caused investors to reassess the pace of AI investment, resulting in Big Tech stocks rising while chipmakers' shares declined.

Global financial markets showed relief after the midterm results, with oil prices dropping and US Treasury yields stabilizing. Analysts suggested that the cycle of fiscal deficits, geopolitical conflict, high oil prices, and rising inflation may be ending. However, uncertainty could return if the Republican administration struggles to collaborate with a Democratic-led Congress.

Big Tech stocks experienced a significant surge due to the expected shift towards stricter AI regulation, while chip stocks faced a decline due to anticipated slower investment in AI data centers. While semiconductor suppliers faced pressure, major tech firms like Amazon, Microsoft, and Alphabet saw their stocks surge. Meanwhile, commodity markets displayed contrasting trends, with gold, silver, copper, and nickel prices moving in different directions, driven by expectations of reduced inflationary pressure and the potential resumption of government incentives for electric vehicles.