Asian Markets Rebound After US Midterm Election Tech Rout

Asian stock markets climbed on Monday, recovering ground lost during a volatile tech sell-off triggered by the Democratic Party’s sweeping victory in the United States midterm elections.

Investor sentiment stabilized across major exchanges in Japan, Taiwan, and Australia, following a rebound on Wall Street on Friday.

The Bottom Line:

Taipei’s Taiex index led regional gains, closing up 4.94 percent on Monday.
The Nikkei 225 in Tokyo climbed 2.33 percent.
The recent sell-off wiped $2.5 trillion from Wall Street valuations on Thursday, driven by concerns that Democratic-controlled legislatures could slow the rollout of data centres used to power artificial intelligence.

The recovery was not uniform across all Asian trading hubs. While Taipei and Tokyo saw significant gains, the KOSPI in Seoul fell 0.8 percent after earlier rising about 1.7 percent, and Hong Kong’s Hang Seng Index dipped 0.22 percent.

The sudden market downturn last week was fueled by concerns that Democratic-controlled legislatures could slow the rollout of data centres used to power artificial intelligence.

Detailed political map of hong kong with relief

According to Cameron Chui, an Asia equity strategist at JP Morgan Private Bank in Hong Kong, the recent decline in AI infrastructure stocks is driven by a mix of more restrictive financial conditions, heightened scrutiny regarding credit access for neocloud firms, and worries about potential delays to AI expansion following the US midterm election results. Despite these pressures, demand for AI technology continues.

Cameron Chui, Asia equity strategist at JP Morgan Private Bank in Hong Kong, said, “We view the recent drawdown in AI infrastructure names as a function of tighter financial conditions, growing scrutiny over credit availability for neocloud companies, and uncertainty over potential delays to the AI build-out post the US midterm election results.

That being said, AI demand and adoption remain strong, 2027 capex visibility remains high, and a meaningful valuation reset has already taken place that at least partly factors in these concerns.”

BREAKING: Asian stock markets climb after earlier tech rout

Chui noted that while the upside potential in Taiwan and South Korea remains attractive, investors must contend with an increased risk of earnings downside for 2028, which has widened the range of potential outcomes for the sector.

At 07:30 GMT, Wall Street futures for the S&P 500 index had risen 0.17 percent, while contracts linked to the Nasdaq 100, which is heavily weighted toward technology, saw a 0.24 percent decline.

Asian Markets Rebound After US Midterm Election Tech Rout

Disclaimer: The information provided in this article is for educational and market analysis purposes only and does not constitute financial, investment, or legal advice. Always consult with a certified financial professional before making investment decisions.