Global Stocks Drop on AI Regulation Concerns After Democratic Midterm Wins
Global Stocks Plunge on AI Regulation Fears
Global stock markets plunged over fears of tighter AI regulation following the Democratic Party's victory in the US midterm elections, with the Nasdaq Composite falling 5.5 percent and wiping approximately $2.5 trillion off its market value. [3] The sell-off began on Wall Street on Thursday as investors reacted to the Democratic Party's victory in the US midterm elections and concerns that tighter regulation would slow investment in artificial intelligence and data centres. [3] Global stock markets suffered losses on Friday amid these developments. [3]
Tech and Chip Stocks Hit Hardest
The S&P 500 lost 4.36 percent and the Dow Jones Industrial Average dropped 1,833 points or 3 percent in the sell-off that began on Wall Street on Thursday. [3] Nasdaq futures climbed on Friday and chip stocks stabilized after the steep AI sell-off, with an exchange-traded fund tracking the US chip sector rebounding 4.7 percent in early trading and Nvidia jumping 4 percent. [2] The technology-heavy Nasdaq Composite fell 5.5 per cent, wiping approximately $2.5 trillion off its market value. [3] A key US semiconductor gauge slumped 16 percent since Monday. [5] Chipmakers bore the brunt of the rout. [5]
Musk Companies Lose $420 Billion
SpaceX and Tesla lost more than $420 billion in combined market value after the GOP losses as investors weighed prospects of congressional investigations and tighter regulation of Elon Musk's companies. [4] The companies' combined losses reached about $456 billion. [4]
Friday Rebound and Global Spillover
US stocks found some respite as dip buyers moved in, with S&P 500 futures rising 0.3 percent and Nasdaq 100 futures rising 1.3 percent, though Asian equities tumbled nearly 4 percent and Europe’s Stoxx 600 fell 1.8 percent. [5] The selloff in US stocks paused, with dip buyers moving in to support the bruised artificial intelligence trade after the S&P 500’s steepest drop in more than a year. [5] Futures for the US benchmark rose 0.3 percent after fears about tighter regulation of data centers helped shave about $3 trillion off the index in the previous session. [5] The Nasdaq 100 was also set to pare some of Thursday’s 6.4 percent loss, with contracts rising 1.3 percent. [5] The turmoil was still playing out in stock markets elsewhere, as a benchmark for Asian equities tumbled nearly 4 percent while Europe’s Stoxx 600 fell 1.8 percent. [5] Markets have swung sharply this week, rallying first on bets that a Democratic sweep would hasten an end to the Iran war before fears of a clampdown on the building of data centers triggered a sharp reversal. [5]
Crypto Exchange Suspends Operations
South Korean cryptocurrency exchange GOPAX suspended withdrawals and trading as a precautionary measure following hacking threats, with no actual loss of assets reported. [1] GOPAX said Friday it had suspended withdrawals and trading as an emergency measure following hacking threats. [1] The exchange said it halted withdrawals at 2:55 p.m. and was transferring most of the assets held in its so-called hot wallets to cold wallets, which are not connected to the internet. [1] It also suspended trading at around 3:53 p.m. [1] GOPAX said it had yet to verify the credibility of the hacking threat but had taken precautionary action to protect customers' assets. [1] No actual loss of assets had been reported, it added. [1] Deposits of virtual assets were also temporarily suspended, while regular withdrawals through the exchange's website and mobile app were disabled, the company said. [1] All outstanding orders were canceled following the suspension of trading. [1] "We received an email from a group claiming to have hacked the exchange, but we have yet to verify whether the threat is genuine," a company official, who asked not to be named, said. [1] "We are prioritizing the protection of customers' assets, even if this causes inconvenience to users." [1] The South Korean financial sector has recently been hit by a series of cybersecurity incidents. [1] The Financial Services Commission earlier said cybersecurity incidents had been confirmed at 37 financial institutions, affecting approximately 470,000 customer records. [1]
Markets Await US Jobs Data
Investors will be looking to US monthly jobs data for more clues on the path for interest rates. [5] Bloomberg Economics expects nonfarm payrolls to show a modest increase of 26,000, while the unemployment rate is likely to hold around 4.2 percent. [5] Neither number would deter the Federal Reserve from its glide path to a December hike, economists including Anna Wong wrote in a note. [5] “A strong jobs report could help calm some of the current market nervousness by reinforcing confidence in the economic cycle, although the immediate focus is likely to remain on AI and data centers,” said Francisco Simon at Santander Asset Management. [5] “Our view remains that cyclical employment has room to expand further, supported by corporate earnings and investment.” [5]
What to watch next: Investors will be looking for clues about the Democratic Party’s intentions, as a credible indication that a nationwide moratorium is off the table could help reverse sentiment, while the question remains whether the rout is a temporary setback or marks the start of a deeper equity pullback.
