AI stocks fall, oil bounces back after 'blue wave' drop
SMH•Chip stocks fell as investors weighed concerns that a Democrat-controlled Congress could restrain AI infrastructure spending. Brent crude rebounded about 2.5% to $96.8 a barrel after an overnight slide of nearly 9%, while the 10-year U.S. Treasury yield stood at 4.89%.
1. Chip stocks retreat
The Philadelphia semiconductor index fell 3.1%, extending its one-month loss to about 25%, as investors considered the possibility of greater scrutiny of AI infrastructure. Democrat data centre opponents who campaigned partly on construction moratoriums won elections in Texas and Georgia. European semiconductor-exposed stocks ASML, Soitec and Infineon fell between 3% and 8%.
2. Oil rebounds
Brent crude rose about 2.5% to $96.8 a barrel after dropping nearly 9% overnight and falling below $100 for the first time in two months. Investors weighed how soon the Iran war could end, with traders betting that a Democratic Congress and high energy prices could make U.S. President Donald Trump less likely to escalate the conflict.
3. Markets and rates
The MSCI All-World index was flat, while the STOXX 600 rose 0.4%. The S&P 500 had closed 1.6% higher overnight, while Nasdaq 100 futures fell 0.8%. U.S. 10-year Treasury yields were at 4.89%, and the dollar edged higher. The Bank of England raised interest rates for the first time since 2023 and signalled further increases may be necessary if the Iran war continues.
