AI Stocks Slide as Asian Markets Split Following US Midterm Results

Asian stock markets reacted unevenly to the results of the United States midterm elections held on Tuesday. Investors in sectors heavily tied to artificial intelligence faced losses, while markets in regions with less exposure to that technology recorded gains. The divergence reflects a market adjustment to the new political balance in Washington, where President Donald Trump's party lost its sole control of the government.

The South Korean Kospi index suffered the steepest decline. By late morning, the index had fallen 3.5% to 5,484.38. The drop was driven by a sell-off in computer chipmakers. Samsung Electronics shares sank 5.7%, and memory chipmaker SK Hynix dropped 7.4%. In Japan, the Nikkei 225 slipped 0.5% to 61,914.53. Tokyo Electron, a chipmaking equipment producer, fell 7.7%, while Advantest, a testing equipment maker, tumbled 9.4%.

Indices with lower concentrations of AI stocks performed better. Hong Kong's Hang Seng index jumped 2.8% to 24,597.59. Australia's S&P/ASX 200 rose 1.9% to 9,003.40. The Shanghai Composite in China edged up 0.1%. This contrast suggests that the initial market reaction was not a broad risk-off move, but a targeted rotation away from high-growth tech stocks.

On Wall Street, the S&P 500 climbed 1.6% on Wednesday. The Dow Jones Industrial Average added more than 1,500 points, surging over 3%. Hospital operators and dollar stores were among the leading sectors. These businesses serve lower-income Americans, a demographic that may be affected by the political shift. Historical patterns indicate that US stocks often rise after midterm elections, regardless of the specific outcome.

Specific companies tied to the administration faced pressure. Trump Media and Technology Group, the parent company of Truth Social, fell 24.5% to $4.49. The stock is far below its peak of $175 reached five years ago. Tesla, owned by Elon Musk, dropped 3.3%. Musk, a former top adviser to Trump, is viewed as a potential target for investigations by the now Democratic-controlled Congress. SpaceX shares also fell 3.8%.

Defense and energy sectors moved in opposite directions. Defense contractors retreated on the expectation that a Democratic-led Congress might pressure Trump to pull back on the war with Iran. Lockheed Martin sank 6.9%, and Northrop Grumman fell 4.5%. Conversely, renewable energy stocks gained. First Solar rose 4.6%, and Enphase Energy climbed 3.7%. This move aligns with the prospect that Democratic control could brighten prospects for solar and wind companies.

Oil prices continued to decline. Brent crude, the international benchmark, fell 8.7% to $94.62 a barrel on Wednesday. Early Thursday, it slipped a further 0.8% to $93.91. US benchmark crude fell 1% to $87.27. The drop in oil prices weighed on major energy firms. ExxonMobil fell 4.6%, and ConocoPhillips dropped 5.2%. The US dollar eased against the yen, trading at 157.96 from 158.41 the previous day.