A record sell-off in US chip stocks rippled across global markets on 6 November, with European shares opening lower as investors weighed whether Democratic gains in the US midterms could bring tougher rules on AI data centres.
On Thursday, S&P 500 companies lost a record $2.9 trillion in market value. The Philadelphia Semiconductor Index closed down 12.2%, its biggest one-day drop since 2020 and leaving it about 16% lower for the week. The Nasdaq Composite fell 5.5%, the S&P 500 4.4% and the Dow 3.4%, all their steepest daily declines since the April 2025 tariff announcement. Quilter’s Stuart Clark noted how heavily both indices depend on a handful of large tech and chip stocks. Tech billionaires were hit hard too, with Elon Musk’s net worth falling by $79.7bn and Jensen Huang’s by $15.1bn, according to Bloomberg.
The trigger appears to be political. Democratic wins in the midterms have raised fears of tougher data centre regulation, as many winning candidates pledged to slow or halt construction. Cleanview estimates about 40% of planned US data centre capacity sits in states where leaders have pledged or imposed a pause. This compounds worries over when companies will see returns on their AI spending, and higher borrowing costs are complicating build-out plans. Reflecting the strain, ING is reportedly selling a roughly $500 million portfolio of data centre loans. President Trump blamed Democrats for the sell-off.
Asia took the brunt on Friday. The Nikkei closed 6% lower, while the Kospi fell 6% after a 20-minute trading halt. SK Hynix dropped 10.4%, Samsung 6.4% and TSMC 4.7%. In Europe, early trading saw the Stoxx 600 down 1.2%, the DAX 1.6%, and the CAC 40 and FTSE 100 each 1.4%. US Nasdaq-100 futures pointed to a rebound of 1.5%, and Saxo’s Neil Wilson suggested the sell-off looked overdone, though stabilisation must come first.
Investors sought safety in bonds, with the US 10-year yield down 6 basis points to 4.84%. The euro slipped 0.4% to $1.1174, gold fell 0.6% to $4,089.90 an ounce, and Brent crude held just above $97 amid signs of progress in US-Iran talks.
At DMX Associates, we are monitoring developments in global equity markets, AI infrastructure investment and US technology regulation.
