Global stocks plunged on Friday as investors’ concerns about the future of artificial intelligence intensified after the Democrats’ sweeping midterm victory. Donald Trump responded by blaming voters, telling them: “You only have yourselves to blame!”
Japan’s Nikkei fell 6 per cent, putting it on course for its sharpest one-day decline since April 2025.
Benchmark indices in South Korea and Taiwan dropped more than 8 per cent shortly after trading began, although both markets later pared some losses as officials moved to calm the sell-off.
Wall Street’s volatility “fear gauge” surged, while the Nasdaq slid 5.5 per cent. Around $3 trillion (£2.2 trillion) was erased from the value of S&P 500 companies as investors feared Democrats, buoyed by their midterm gains this week, could slow the AI boom.
The sell-off came only days after a “blue tsunami” swept Republicans aside in the midterms. Trump said voters were responsible for the market turmoil in a post on Truth Social on Thursday.
“The Stock Market crashed today because the Dumocrats had a big Tuesday — So sad to see, you only have yourselves to blame!” he wrote.
In a second Truth Social post, the President directly linked the market decline to the Democrats’ election performance.
Donald Trump blamed voters for the market turmoil, telling them: “You only have yourselves to blame!”
A man points to an electronic board displaying Japan’s Nikkei 225 index in Tokyo
“The Stock Market suffered one of the Worst Days in History based on the results of the Election,” Trump said.
“Such a sad thing to watch! It took so much work to get us to a level that no one has ever seen before, and then this. Your 401(k)s have, therefore, dropped. Remember, it wasn’t Republicans, it was Dumocrats,” he added.
The political uncertainty has struck an AI trade that was already under pressure because of questions about whether companies can generate sufficient returns from their huge investments in AI infrastructure. The latest rout unsettled both individual investors and hedge funds.
On Thursday, shares linked to artificial intelligence were battered, with data-centre suppliers and chipmakers suffering some of the steepest declines.
Investors are concerned that a Democratic-led government could mean reduced demand for AI chips and other advanced technology products that currently account for a significant share of US economic growth.
Chipmakers Nvidia and Broadcom suffered dramatic losses on Thursday. Nvidia fell 9.3 per cent, while Broadcom dropped 10.5 per cent. Rival Qualcomm ended the session 9.5 per cent lower.
The technology-heavy Nasdaq Composite closed down 5.5 per cent, moving firmly into correction territory after four weeks of gradual declines. The benchmark S&P 500 fell 4.3 per cent.
By Friday afternoon in Asia, markets had begun to steady as authorities took steps to reassure investors. South Korean Finance Minister Lee Hyoung-il temporarily relaxed rules governing leveraged investments by retail traders.
Several sources told Reuters that Taiwan’s Ministry of Finance contacted senior executives at state-owned banks and directed them to support the market. Taiwan’s index ultimately closed 4.5 per cent lower, recovering from a much steeper early decline.
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Nasdaq futures rose 0.6 per cent, while European stock futures were down 0.9 per cent, suggesting that investor confidence remained fragile.
AI chipmakers Samsung Electronics and SK Hynix fell almost 10 per cent and 12 per cent respectively in South Korea. Japan’s Kioxia plunged 14 per cent, while Taiwan Semiconductor Manufacturing Company dropped as much as 8.5 per cent in Taiwan.
SoftBank Group, a major AI investor, fell 11 per cent. The cost of insuring against a default on the Japanese company’s debt rose to its highest level in four years.
“The selloff shows that AI stock prices had been built on rosy illusions about the future, and now that illusion is gone,” said Dong Baozhen, chairman of asset manager Lingtong Shengtai.
“The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped. Can AI bull markets elsewhere hold up on their own?”
Investors were also questioning whether a slowdown in AI infrastructure spending could damage smaller companies that are already struggling to raise capital amid higher interest rates and tighter financial conditions.
Neocloud provider CoreWeave, viewed as a gauge of concern over heavy AI investment and borrowing, dropped 10 per cent. Its five-year credit default swap spreads also widened to a record high.
“It’s pretty clear there’s been a real shift in sentiment,” said Michael McCarthy, chief executive for Australia and New Zealand at brokerage Moomoo.
The sell-off indicates that investors are beginning to price in growing opposition to data centres in local communities. Analysts say markets have not yet fully reflected the costs these facilities place on residents.
Texas Governor-elect Gina Hinojosa said on Thursday that the state would introduce laws to protect residents from the effects of data centres, citing their impact on rural communities.
South Korean dealers work in front of monitors and a large screen at Hana Bank in Seoul
Even so, some analysts argued that the market decline had gone too far and that a bottom could be close.
“Today we are bound to see further liquidation of margin accounts, which suggests we are likely in the final stage of capitulation,” said Allen Huang, vice president of the equities trading department at Mega Financial Holding.
“Even TSMC hit its daily limit down circuit breaker at one point, which typically marks the tail end of a downturn. When TSMC gets sold off, that means all stocks have been thoroughly dumped,” Huang said.
Asian bonds rose, with US Treasuries and government debt in Japan and China gaining ground. The US dollar weakened against traditional safe-haven currencies, including the yen and Swiss franc.
“Bonds are increasingly behaving like bonds again, with income re-emerging as the primary driver of returns and restoring their traditional diversification benefits,” said Masahiko Loo, chief fixed income strategist at State Street Investment Management.
“This looks more like a reassessment of AI policy risk than a reassessment of the AI cycle.”
The yield on the benchmark 10-year US Treasury note stood at 4.838 per cent, close to its lowest level since September 9. The 10-year Japanese government bond yield fell by as much as nine basis points to 1.795 per cent, its lowest level since June 30.