Shares were mixed in Asia on Thursday as heavy selling of AI-related stocks offset gains for some markets following the U.S. midterm elections.
South Korea’s Kospi sank more than 5% and the Nikkei 225 in Tokyo lost nearly 2%. Oil prices fell and U.S. futures were mixed after the Dow industrials jumped more than 3% on Wednesday following the loss of control of Congress by President Donald Trump’s party.
U.S. stocks usually climb following midterms, regardless
of who wins. But technology shares have taken a hit as investors mull the potential impact on the boom in artificial intelligence from a Congress led by Democratic Party lawmakers.
The Kospi, which has gyrated through waves of selling and buying driven by the AI frenzy, tumbled 5.3% to 5,383.80.
Shares in Samsung Electronics sank 7.6%, while memory chipmaker SK Hynix lost 9.4%.
In Tokyo, the Nikkei 225 fell 1.8% to 61,077.90. OpenAI investor SoftBank Group shed 6.9%, while computer chipmaking equipment company Tokyo Electron skidded 9.5%. Testing equipment maker Advantest tumbled 15%.
Taiwan's Taiex lost 3.2%.
On Wednesday, the S&P 500 jumped 1.6%. The Dow surged more than 1,500 points, and the Nasdaq composite rose 1.4%.
Asian markets less heavily exposed to the AI industry mostly climbed Thursday. Hong Kong's Hang Seng jumped 3.2% to 24,675.22. The Shanghai Composite index edged 0.1% lower, to 3,682.30.
In Australia, the S&P/ASX 200 rose 2.6% to 9,065.10, while India's Sensex gained 2%.
“Global equity markets mostly welcomed the strong win by Democrats, with European and Chinese markets surfing on hopes that the Democratic shift in Congress could increase pressure to undo some tariffs and restore stronger trade ties with the U.S.,” Ipek Ozkardeskaya of Swissquote said in a commentary.
However, she noted, with regard to AI, “The Democratic victory is expected to become a potential obstacle to an investment story already facing questions over massive spending, future returns and financing.”
Wednesday on Wall Street, stocks of hospital owners and dollar stores serving low-income Americans helped lead the widespread rally following the nationwide losses for Republicans.
Overall, the election may not matter much for the broad market in the long term. Prices for stocks depend more on where profits for companies and interest rates are heading than on who controls what in Washington. But investors generally prefer split control of Washington because it lessens the risk of transformative changes to the U.S. economy.
But investors see risks ahead for Trump’s social-media company, the artificial-intelligence industry and businesses owned by Elon Musk, who donated heavily to Republicans.
Trump Media & Technology Group was one of the market’s bigger losers Wednesday, down 24.5%.
Since briefly touching a peak of $175 five years ago, it’s dropped to $4.49. Its main business is Truth Social, which is best known for Trump’s postings on the platform.
Elon Musk’s businesses also struggled. Tesla fell 3.3%, and SpaceX sank 3.8%. Musk, a former top Trump adviser, is among the possible targets for investigations by a Democratic-controlled Congress.
Given Trump's role as a big backer of the AI industry, the setback for Republicans has added to worries over whether share prices boosted by the buildup of AI have flown too high.
A Democratic-led Congress could push Trump to pull back on the war with Iran, and that hurt stocks of companies that make weapons and other equipment for the U.S. military. Lockheed Martin sank 6.9%; Northrop Grumman fell 4.5% and General Dynamics lost 2.6%.
The possibility of pressure to pull back on the war also sent the price for a barrel of Brent crude oil, the international standard, plunging 8.7% to $94.62. That in turn hurt stocks of big oil companies, which had been rallying for much of the year. ExxonMobil fell 4.6%, and ConocoPhillips dropped 5.2%.
Early Thursday, Brent crude was down 0.4% to $94.22 per barrel, while U.S. benchmark crude fell 1.1% to $87.19 per barrel.
In other dealings early Thursday, the U.S. dollar slipped to 157.92 Japanese yen from 158.41 yen. The euro rose to $1.1262 from $1.1228.
