Global stocks fall amid AI worries after Democrats' midterm victory

European and Asian stock markets fell sharply on Friday after a sell-off in US tech stocks on Thursday.

Market moves

The FTSE 100 index was down as much as 254 points, or 2.35%, at 10,528 points during morning trading, before closing down 1%. Germany’s Dax index fell by 2%, France’s Cac 40 dropped by 0.8% and Spain’s Ibex lost 0.6%.

In Asia, Japan’s Nikkei 225 index sank 6% and South Korea’s Kospi index tumbled more than 6.5%.

On Thursday, the Nasdaq share index had its worst day in 19 months after slumping 5.5%. Chip stocks led the slump, with SanDisk tumbling by 22% and Western Digital falling by 17%. Wall Street’s “fear index”, the Vix, jumped by more than 60% to its highest levels since the early weeks of the Iran war.

Analyst comments

Susannah Streeter, chief investment strategist at Wealth Club, said: “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.

“Big worries are colliding – the build-out of datacentres 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.”

Christopher Forbes, head of Asia and Middle East at CMC Markets, said: “It’s actually a bit of a disaster.”

Chris Beauchamp, chief market analyst at IG, said: “Yesterday’s [Thursday’s] brutal session marked a dramatic turnaround from Wednesday, but with AI fears still prominent there is a risk that there is much more selling to come.”

Jobs data and partial recovery

There were signs of easing jitters on Wall Street on Friday, where tech stocks rose, lifting the S&P 500 share index by 0.3% and the tech-heavy Nasdaq closed up 1%. That followed a stronger-than-expected employment report that showed the US economy added 165,000 new jobs in October, with the unemployment rate down to 4.1%.

Mohit Kumar, an economist at Jefferies, said: “AI investment has been a key driver of US growth and we do not see the Democrats as giving up on this growth engine. Datacentres and AI infrastructure also create jobs and Democrats would be reluctant to let those jobs move on to other states or outside the country.”

Why it matters

The sell-off spread from US tech stocks to European and Asian markets, driven by concerns over AI investment and datacentre expansion. Despite the sharp losses, most indices remain up for the year, with the Nasdaq Composite up 6.35% since the start of January and the FTSE 100 up almost 7.5% in 2026.

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Sources

• theguardian.com: Global stocks fall amid ‘big worries over AI’ after Democrats’ midterms triumph | Stock markets | The Guardian
• inkl.com: Global stocks fall amid ‘big worries over AI’ after…

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.