Asian and European markets follow US tech rout with many analysts predicting more waves of selling to come
European and Asian stock markets experienced sharp declines on Friday, following a significant sell-off in US technology stocks triggered by the Democrats’ decisive midterm election victory the previous day.
The downturn on investors have become super nervous about returns on this massive investment.”
Nevertheless, there were indications that market nerves were settling on Wall Street by Friday. Tech stocks rose, helping the S&P 500 gain 0.3% and the tech-heavy Nasdaq close up 1%, though these gains only partially offset the previous day’s losses.
This recovery followed a stronger-than-anticipated employment report, which indicated that the US economy added 165,000 jobs in October, pushing the unemployment rate down to 4.1%.
On Thursday, the Nasdaq index suffered its worst performance in 19 months, slumping 5.5%.
Chip stocks were at the forefront of Thursday’s decline, with SanDisk shares tumbling 22% and Western Digital falling 17%. Wall Street’s “fear index,” the Vix, surged more than 60% to reach its highest level since the early weeks of the Iran war, reflecting heightened market volatility.
The heavy losses persisted across Asia on Friday, with Japan’s Nikkei 225 index sinking 6% and the South Korean Kospi index dropping more than 6.5%.
“It’s actually a bit of a disaster,” said Christopher Forbes, the head of Asia and Middle East at CMC Markets.
“[Clients] were long index, long stocks, and they all got carried out. All night, all day – we had client margin calls, client complaints … because it’s a very emotional thing, right? People are wedded to their positions and views on a stock or outcome, and you’re telling them: ‘Look, you’ve just lost money.’”
Chris Beauchamp, the chief market analyst at the investing and trading platform IG, said: “Yesterday’s [Thursday’s] brutal session marked a dramatic turnaround from Wednesday, but with AI fears still prominent there is a risk that there is much more selling to come.
“Investors remain on watch for a potential resumption of the Iran conflict, and are nervously watching the oil price after its slump earlier in the week. All in all it remains a very febrile atmosphere.”
Despite the significant losses seen across global stock markets, most indices remain in positive territory for the year. The Nasdaq Composite is still up 6.35% since the start of January, even though it currently sits more than 10% below its peak.
The FTSE 100 has gained nearly 7.5% in 2026, though it remains more than 300 points below the record high reached in July.
Mohit Kumar, an economist at the investment bank Jefferies, noted that while he did not anticipate an immediate recovery from Thursday’s US losses, he also did not believe it signaled the “start of the unwind of the AI trade”.
He said: “AI investment has been a key driver of US growth and we do not see the Democrats as giving up on this growth engine. Datacentres and AI infrastructure also create jobs and Democrats would be reluctant to let those jobs move on to other states or outside the country.”
Market instability has also impacted the London Metal Exchange, with copper heading toward its largest weekly decline since March.
Benchmark three-month copper, a vital material for the semiconductor, electronics, and automotive sectors, has fallen 0.61%, putting it on track for a 2.79% loss for the week.
Craig Lang, a principal analyst at the consultancy CRU, stated that copper prices are increasingly influenced by the AI market and “sentiment towards datacentre expansion”.
