Global tech stocks slide as AI regulation fears hit markets
Global stock markets are tumbling as investors fear a Democratic sweep in the midterm elections will bring tighter regulation and slow the AI boom that has supported U.S. growth and computer component shares worldwide. The sell-off is spreading from Wall Street into Asia, with sharp losses in Seoul and Tokyo underscoring concern over AI-related demand and financing conditions.
Highlights
- Nasdaq plunges 5.5% Thursday—its biggest drop since 2025—as global equities sell off on fears of AI regulation.
- Asian markets tumble with Seoul stocks down 8% at open and Tokyo's Nikkei falling over 6%, triggering trading halts.
- Investor sentiment weakens on expectations Democrats will limit data centre expansion, lower AI spending, and higher capital costs after Fed rate hikes begin in September.
Market sell-off spreads across regions
As reported by Reuters, the Nasdaq falls 5.5% on Thursday, marking its biggest drop since the tariff-triggered "Liberation Day" rout in 2025. In Friday trading in Asia, trading in Seoul is halted after stocks plunge 8% at the open, while Tokyo's Nikkei drops more than 6%.Michael McCarthy, CEO of Moomoo Australia and NZ in Sydney, says the market is showing a clear shift in sentiment, with large swings signaling a possible turning point for U.S. equities. He says the previous session's heavy selling suggests major investors now believe the rally has run its course.
Investors reassess AI demand outlook
Mark Fuchs, CIO at Fuchs Capital Partners in Singapore, says investors are reacting to expectations that Democrats will take a more cautious approach to data centres and AI. He says that implies lower spending, tougher conditions for data centre expansion and a further downward repricing for Asian technology stocks.Fuchs adds that the sector is already under pressure because markets are also factoring in a higher cost of capital after the Federal Reserve starts raising rates in September. He says his firm prefers non-AI sectors and markets with stronger domestic growth stories, including India, while hedging currency and index exposure.
Our earlier article on the Nasdaq-100’s selling pressure highlighted how the index was trading below key short- and medium-term moving averages, keeping downside risks elevated despite some mixed momentum signals. It also covered the launch of JQQQ, a blockchain-native fund from Janus Henderson and Centrifuge designed to broaden digital access to Nasdaq-100 exposure, while noting that concentration in index leadership and doubts about AI-related capex were making the market more vulnerable to further declines.
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