It was a rough week for global markets, as a selloff in US tech stocks spread to Asia and beyond. The trigger? The US midterm elections, which saw voters reject data center projects in their backyards. That sent a clear message to investors: the AI buildout may not be as smooth or as welcome as many had hoped.
What happened
The Nasdaq 100 index fell 6% on Thursday, leaving it 15% below its October peak. The index lost a staggering $2.5 trillion in a single day, sparking a global selloff. Japan's Nikkei 225 fell 6% on Friday, its worst one-day drop since the US announced "Liberation Day" tariffs in April 2025. The index is now down 9% this week and 20% from its June peak.
Taiwan's TAIEX fell nearly 5% on Friday, landing 20% below its October high. South Korea's Kospi dove 6%, taking its drop from its June high to a staggering 44%.
Why it matters
The main driver was the US midterm elections. Voters said "not in my backyard" to data centers, and investors responded "not in my portfolio." The fear is that local opposition could slow down the massive buildout of AI infrastructure that has powered tech stocks to record highs.
Notably, indexes with less AI and tech exposure didn't dip. European, Australian, and Indian indexes are all up single digits this month, showing that the selloff is concentrated in the tech sector.
What it means for investors
For markets, the pain is concentrated in chipmakers and other AI-related companies. Memory-chip makers SK Hynix and Samsung Electronics, which make up nearly half of the Kospi, fell 10% and 6% on Friday. TSMC, the world's leading advanced chipmaker and 41% of the TAIEX, ended the day down 4.7%. US chip and optical-component makers Marvell, Lumentum, and Intel dropped sharply on Thursday, leaving them down more than 50% over the past month.
For individual investors, this is a wake-up call about diversification. The Cboe Volatility Index, also known as the "fear index," is up around 60% over the past month. That's a sign that markets are spooked.
Consider this a sign to make sure your portfolio is actually diversified: just because you're in different markets doesn't mean you're not exposed to the same themes (ahem, AI). If you own a tech-heavy index fund, you might be more exposed to this selloff than you think.
For a deeper look at how this selloff is spreading, check out our analysis of AI worries spreading from the US to Asia.
US jobs data adds to the mix
Meanwhile, the US economy added 165,000 jobs in October, far exceeding the 59,000 forecast. The unemployment rate dipped to 4.1% from 4.2%, and hiring was broad, led by healthcare and professional and business services. August and September's figures were revised up by a combined 84,000 jobs.
This strong jobs report gives the Federal Reserve another reason to raise interest rates. Investors were already expecting a December rate hike, and the odds have now increased. If Tuesday's inflation report runs hot, those odds will likely climb further.
For more on how this affects rate-cut bets, see how the AI selloff and oil spike are shaking rate-cut bets.
In the meantime, the tech selloff is also affecting other assets. Copper is heading for its worst week since March, as the tech selloff cools demand hopes. And the dollar is firming as investors seek safe havens. For more, check out how the dollar is benefiting from the selloff.
As always, it's important to keep a long-term perspective. Market selloffs are normal, and they can create opportunities for patient investors. But they also remind us that no single theme, no matter how powerful, should dominate your portfolio.
