AI Stock Sell-Off Weighs on Asian Markets After US Midterms

South Korea’s Kospi fell 5.3% to 5,383.80, with Samsung Electronics down 7.6% and SK Hynix losing 9.4%. Japan’s Nikkei 225 dropped 1.8% to 61,077.90. SoftBank Group fell 6.9%, Tokyo Electron lost 9.5% and Advantest sank 15%. Taiwan’s Taiex declined 3.2%.

Markets more lightly exposed to AI-related shares rose. Hong Kong’s Hang Seng gained 3.2%, Australia’s S&P/ASX 200 climbed 2.6% and India’s Sensex added 2%. The Shanghai Composite edged down 0.1%.

The regional moves followed a rally on Wall Street on Wednesday. The Dow rose more than 1,500 points, or over 3%, while the S&P 500 gained 1.6% and the Nasdaq Composite advanced 1.4%. Investors were weighing the implications of Democrats taking control of Congress, including possible effects on tariffs and trade, as well as the outlook for AI investment.

Shares in Trump Media & Technology Group fell 24.5% on Wednesday. Tesla lost 3.3% and SpaceX fell 3.8%. A Democratic-led Congress could also pressure President Donald Trump to pull back from the war with Iran, a prospect that weighed on defense company shares and oil prices. Brent crude fell 8.7% on Wednesday to $94.62 a barrel and was near $94 early Thursday.

Investors may focus more on company profits and interest rates than on control of Congress over the longer term, while divided government can reduce the prospect of major economic changes. The election’s effect on AI-related investment remains a concern for markets.

Democratic Midterm Win Puts Pressure on Trump’s Market Priorities

The market reaction to Democratic gains in Congress was sharply divided: Asian chip and AI stocks tumbled, while many other regional markets advanced. The Kospi fell 5.3%, Samsung Electronics lost 7.6% and SK Hynix dropped 9.4%. Japan’s Nikkei declined 1.8%, with steep losses for AI-linked companies including Advantest and Tokyo Electron.

Elsewhere, Hong Kong’s Hang Seng rose 3.2% and Australia’s S&P/ASX 200 gained 2.6%. U.S. shares had rallied on Wednesday, with the Dow jumping more than 3%. Investors were also looking to the possibility that a Democratic-led Congress could press for changes to tariffs and stronger trade ties.

The election could bring scrutiny to priorities backed by Trump and Republican donor Elon Musk. Trump Media & Technology Group fell 24.5% on Wednesday, while Tesla dropped 3.3% and SpaceX lost 3.8%. The AI industry faces questions about massive investment, future returns and financing, with investors concerned that valuations may have risen too far.

Democrats could also push Trump to pull back from the war with Iran. Defense stocks fell, while Brent crude slid 8.7% to $94.62 a barrel on Wednesday amid expectations of pressure to de-escalate. Lower oil prices also weighed on major oil companies. The stakes extend beyond the day’s market moves: control of Congress could constrain the administration’s course on trade, war and support for AI investment.

AI Sell-Off Shows the Cost of Political Uncertainty

A political shift in Washington has added uncertainty for industries that have benefited from Trump’s backing, and investors are already questioning whether AI stocks have climbed too high. South Korea’s Kospi plunged 5.3%, Samsung Electronics fell 7.6% and SK Hynix dropped 9.4%. Japan’s Nikkei lost 1.8%, with major AI-related companies among the sharpest decliners.

The losses came even after U.S. markets rallied Wednesday: the Dow jumped more than 3%, the S&P 500 gained 1.6% and the Nasdaq rose 1.4%. Asian markets with less exposure to AI shares advanced, including Hong Kong and Australia.

Investors face the prospect of a Democratic-led Congress challenging policies and business interests associated with Trump. Trump Media & Technology Group fell 24.5% on Wednesday. Tesla and SpaceX, both owned by Elon Musk, also declined; Musk is among the possible targets for congressional investigations.

Democrats could press Trump to pull back from the war with Iran, a prospect that pushed defense shares lower and contributed to an 8.7% plunge in Brent crude on Wednesday. Oil was trading near $94 a barrel early Thursday. Lower prices can also reduce the incentive to move to renewable energy, though Democratic control could benefit solar and wind companies: First Solar rose 4.6% and Enphase Energy gained 3.7% on Wednesday.