LONDON: Technology shares plunged Friday after an unnerving rout on Wall Street as fears grew that Democrats would accelerate a backlash against AI after their crushing defeat of President Donald Trump’s Republicans in the US midterms.
The Tokyo and Seoul stock markets closed out their weeks with losses of six per cent following the Nasdaq’s 5.5 per cent collapse on Thursday, its worst showing since April last year when Trump unveiled his wide-ranging global tariffs.
“The tech sell-off has intensified, with the pain of the brutal sell-off on Wall Street carried straight through to Asia and knocking sentiment in Europe,” said Susannah Streeter, chief investment strategist at Wealth Club.
“Big worries are colliding — the build-out of data centres looks set to slow, which risks shredding the spending spree underpinning the boom, right at the time that investors have become super nervous about returns on this massive investment,” she said.
The London, Paris and Frankfurt stock markets shed around two per cent nearing the halfway stage despite featuring few technology firms.
Elsewhere, the dollar firmed before key US jobs data Friday, and oil prices steadied following steep declines this week.
Futures contracts pointed to a rebound on the Nasdaq later this afternoon, but further declines for the broad-based S&P 500.
Data centres have faced broad opposition from US voters across the political spectrum, and many midterm winners have pledged to put the brakes on such projects.
Analysts said investors were also spooked by a call from progressive US Senator Bernie Sanders for a national moratorium on their building.
The results compounded already heightened fears about the hundreds of billions firms had pumped into the sector and when they would see a return, while the recent spike in borrowing costs also fuelled concerns about their financial position.
Bloomberg said the Philadelphia Semiconductor Index had collapsed around 16 per cent this week, putting it on course for its worst run since April last year.
On Seoul’s Kospi stocks index, chip giant SK Hynix slumped 10 per cent and its rival Samsung lost 6.4 per cent.
The Kospi more than doubled in value between the end of December and mid-June, when it hit a record, but is down almost 50 per cent over the past four and a half months.
Tokyo dived six per cent Friday as Japanese tech investor SoftBank gave back more than 10 per cent, while chipmaker Kioxia collapsed 8.7 per cent and semiconductor tester Advantest retreated five per cent.
A 4.7 per cent drop for Taiwanese chip giant TSMC dragged down Taipei’s Taiex.
“The blood is in the streets, folks,” wrote Neil Wilson, analyst at Saxo Markets, though he added that the sell-off looked “overdone”.
“The fear is a total momentum unwind as Democrats pace the frontier and kibosh data centre build-out,” he said.