Stocks tumble as AI panic sweeps markets, bonds draw haven demand
SPY•Technology stocks plunged after investors feared a Democratic election win would bring greater AI regulation and slow data-centre construction. South Korea and Taiwan stocks fell more than 8% intraday, the Nasdaq sank 5.5%, and $3 trillion was wiped off S&P 500 firms as bonds gained.
1. Global stocks sell off
A steep technology-stock rout spread across markets on Friday as investors worried that the Democrats’ US midterm election victory would increase AI regulation and slow data-centre expansion. Japan’s Nikkei fell 6%, while South Korean and Taiwanese indexes plunged more than 8% before trimming losses; Taiwan closed down 4.5%.
2. AI concerns weigh
The Nasdaq sank 5.5%, and $3 trillion was wiped off S&P 500 firms. Investors were also concerned about returns on heavy AI infrastructure spending, funding pressures on smaller firms and local opposition to data centres. CoreWeave fell 10%, while its five-year credit default swap spreads widened to a record.
3. Bonds attract demand
US Treasuries, Japanese government bonds and Chinese government bonds rose. The US 10-year Treasury yield stood at 4.838%, near its lowest level since September 9. Asian authorities took steps to support markets, including temporarily easing South Korean rules on retail investors’ leveraged investments.
