Nasdaq futures initially dropped over 2% amid AI regulatory concerns
Global markets saw a downturn on November 4 following the Democratic Party's victory in the US Congressional elections. The US currency slipped to a one-month low over fears of tighter oversight in the tech sector. This was reported by Economichna Pravda citing Reuters, according to the portal PromPolitInform.
Democratic candidates secured majorities in both the Senate and the House of Representatives, winning in regions traditionally held by Republicans. Market participants fear that the shifted balance of power in Washington will complicate the implementation of Donald Trump’s economic agenda and increase scrutiny over artificial intelligence companies.
Stock index futures reacted with sharp drops before paring some of their losses. Specifically, Nasdaq futures initially fell by over 2% before trimming the decline to 0.5%, while S&P 500 futures dipped by 0.35%.
European equity contracts also partially recovered, with their initial 1.5% drop narrowing to 0.4%. In Asia, chipmakers including Samsung, SK Hynix, and TSMC faced heavy selling pressure, and South Korea’s KOSPI index lost up to 3% during trading before returning to modest growth.
According to TD Securities strategist Prashant Newnaha, the Democratic win increases the likelihood of stricter technology and AI regulation, as well as prolonged political friction in Washington.
Cryptocurrencies also traded lower amid expectations of harsher oversight, while investors flocked to government bonds in search of safer assets.
A previous sell-off in US tech equities occurred on October 30 due to weak corporate forecasts and doubts regarding the profitability of massive AI investments, during which Intel shares plunged by nearly 30%.
Photo: Economichna Pravda
