Tech sell-off spreads as US midterms fuel slowdown fears

Global stock markets fell as investors feared Democratic victories in the US midterm elections could slow AI development. Democrats won control of the Senate and House of Representatives after candidates campaigned against data centre expansion. The political shift added to concerns about whether heavy investment in the technology will generate returns.

The Nasdaq sank 5.5% on Thursday, losing an estimated $2.5tn (£1.9tn) in market value and entering correction territory. Nvidia shares dropped more than 9%. Despite the decline, the Nasdaq remained up about 4.6% from the start of the year.

The selling spread to Asia on Friday, with Japan’s Nikkei and South Korea’s Kospi each closing down 6%. A sharper intraday fall in South Korea triggered a temporary trading halt. European losses were smaller, with Germany’s Dax down 2.4%.

Investors face uncertainty over potential restrictions on the infrastructure needed to power AI. Senator Bernie Sanders called for a national data centre moratorium, while President Donald Trump reaffirmed support for the sector. OpenAI president Greg Brockman said the backlash had surprised technology leaders and acknowledged that companies needed stronger engagement with communities hosting their infrastructure.