Introduction: Global stocks tumble as AI panic grips markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Fears that the Democratic Party’s blue wave in this week’s midterm elections will sink the AI investment boom are roiling markets, following heavy losses on Wall Street last night.
Asia-Pacific markets are a sea of red (unlike the US election map on Tuesday night!), as investors ditch tech stocks after more than $3.2tn was wiped off the US stock market yesterday.
Today, Japan’s Nikkei stock index has slumped by almost 6% – its worst drop since April 7 2025 during the ‘liberation day’ tariff panic.
South Korea’s KOSPI is down 6.7%, and Taiwan’s TAIEX has dropped by 4.5% in a broad rout.
Christopher Forbes, head of Asia and Middle East at CMC Markets, called the market action “a bit of a disaster”, explaining (via Reuters):
After months of warnings that AI valuations were too high, and that the bubble might burst, US investors dashed to the exits en masse yesterday. The Nasdaq tech index slumped by 5.5%, while the Dow Jones Industrial Average (DJIA) dropped 1,833.06 points, or 3.44%, and the S&P 500 lost 4.36%.
Memory chip makers, who had been profiting from the AI boom, led the fallers – SanDisk slumped 22% and both Micron and AMD lost 17% of their value.
Chip giant Nvidia led the fallers on the DJIA, down over 9%.
Analysts pointed to policy uncertainty as Democrats are more critical of data centres, which could slow the rollout of AI investment – especially given public opposition to the sector.
Kyle Rodda, senior financial market analyst at Capital.com, says it was a “brutal sell-off” as fears about the future of the AI buildout gripped the markets.
So, it could be a ‘tin hats on’ day in the markets. Investors will also be watching the latest US jobs report, for clues into the health of America’s labour market.
The agenda
7am GMT: Lloyds house price index
9am GMT: UN’s FAO food price index
1.30pm GMT: US non-farm payrolls jobs report
3pm GMT: University of Michigan’s US consumer confidence report
Ahead of this week’s losses, there were plenty of warning signs that markets might have risen too fast.
As my colleague Richard Partington and I wrote in late September, the warning lights were “flashing red” as the fighting in the Middle East intensified, a slowdown loomed in the AI arms race, and government borrowing costs hit multi-decade highs.
One popular measure used by investors to assess whether a market is overvalued – the CAPE ratio – or cyclically adjusted price-to-earnings ratio – had risen to its highest level since 2000 by September, showing that the US stock market is unusually highly valued compared with its profits.
This week’s losses have pulled the CAPE ratio down (you can see it here), but it’s still historically high:
Reasons not to panic
Amid the scary-everything-is-bad-in-stocks news, it’s easy to feel a bit worried about pensions or savings, my colleague Siraj Datoo writes.
And yes, yesterday was a bad day in particular for technology stocks, with the Nasdaq losing $2.5tn in market capital in a single day.
But it’s worth taking a second to pause. While many of the charts leading newspaper homepages are fairly narrow, showing the dramatic fall in just a few days, if you look at the Nasdaq, the US index mostly dominated by tech stocks, from the start of the year, it’s still up 4.6% YTD (see previous post for more details).
Of course, this correction still could have room to run and markets are famously emotional. But there have been warnings about this. Michael Burry, the famous fund manager behind The Big Short, has been screaming from the sidelines about overvaluations in the tech world.
One of the major concerns right now is the huge data centre buildout in the US and whether Democrats will place restrictions or slow things down. That’s a problem for investors because so many of the world’s biggest companies have invested enormous amounts of money — often taking on additional debt — to fund their deep investment. The bet is that the artificial buildout will eventually generate big returns but investors are now increasingly worried about just how long that will take.
Most markets still up for the year
Despite the sharp losses suffered on global stock markets around the world, most indices are still up for the year.
The Nasdaq Composite index, for example, is still up 4.6% since the start of January – even though it’s more than 10% below its peak.
Britain’s FTSE 100 share index has gained almost 6.9% in 2026, even though – at 10,615 points – it’s more than 300 points below the record high set in July.
South Korea’s KOSPI is up over 29% year to date – which sounds impressive until you remember that it doubled in the first half of 2026, driven by huge demand for chipmakers Samsung and SK Hynix from the AI industry.
China’s CSI 300 stock index, though, are down over 12% this year – its AI stocks fell sharply a few months ago.
European markets drop, FTSE 100 down 1.5%
Europe has joined the global selloff.
The FTSE 100 index, which tracks blue-chip shares listed in London, has dropped by 166 points, or over 1.5%, at the start of trading to 10,615 points. Most of the hundred stocks on the index are down.
Pharmaceuticals giant AstraZeneca (-2.8%) are the top faller on the FTSE 100.
Other fallers include IAG (-1.5%) which owns British Airways, after it which missed profit forecasts this morning and warned that its annual capacity would be slightly lower than a year earlier.
Germany’s DAX index is down 1.5%, France’s CAC 40 has dropped by 1.2% at the open, Spain’s IBEX is down 1.1%.
Susannah Streeter, chief investment strategist at Wealth Club, says:
Donald Trump isn’t really correct to say that the stock market “suffered one of the worst days in history”.
Yesterday’s 3.44% tumble on the Dow Jones industrial average (DJIA) certainly doesn’t compare with Black Monday (October 19 1987), when the Dow crashed by 22.6%.
Since then, there was a 7.87% drop on 15 October 2008 (the financial crisis), a 12.9% tumble on 16 March 2020 (the Covid-19 pandemic) and a 5.6% drop in April 2000 (after the dot-com bubble burst), to pick a few recent bad days since.
Indeed, there seem to have been more than 70 larger falls on the DJIA since 1987 (based on my eyeballing of the data). The DJIA tracks 30 large US companies, including Apple, Amazon, Nvidia, Coca-Cola and Walt Disney.
But in value terms, it was a more significant selloff, especially for tech stocks.
The Nasdaq 100 Index sank 6.4%, wiping out $2.3tn in market value, the most on record, Bloomberg has calculated.
There were some dramatic scenes in Asia-Pacific stock markets today.
In Taiwan, the benchmark Taiex stock index plunged a record 3,737.67 points in early trading. It closed down 1,791 points, or 4.6%.
Taiwanese stocks had benefited from the AI boom – earlier this week, the Taiex index was up more than 50% for the year.
Over in Seoul, the Kospi index fell to its lowest level since early April, in a slump which triggered a 20-minute circuit breaker.
UK house prices fell unexpectedly in October
Stocks aren’t the only thing dropping in value!
UK house prices fell by 0.6% in October, new data from Lloyds bank shows.
Prices were 1.2% lower than a year ago, the biggest annual fall since October 2023.
A Reuters poll of economists had predicted a 0.1% monthly increase and an annual fall of 0.3%.
Lloyds reports that the average property price dropped to £296,285 last month, down from £298,167 in September.
Andrew Asaam, mortgages director at Lloyds, explains:
European stock markets are expected to join the selloff when trading begins, in around 45 minutes.
The UK’s FTSE 100 share index is being called down over 1% in IG’s futures market, as is Germany’s DAX index.
Japan’s Nikkei share average has posted its worst week in more than six years.
For the week, the benchmark was down 9.3%, its worst weekly decline since March 2020 during the pandemic, Reuters points out.
Trump: 'Dumocrats' caused market crash
Donald Trump has blamed the Democratic party for the market selloff.
Posting on his Truth Social site, the president wrote:
He then appeared to blame the voters too (!), adding:
The Financial Times have calculated that US stocks shed $3.2tn on Thursday, in a day of “chaotic trading”.
Thet explain:
Introduction: Global stocks tumble as AI panic grips markets
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Fears that the Democratic Party’s blue wave in this week’s midterm elections will sink the AI investment boom are roiling markets, following heavy losses on Wall Street last night.
Asia-Pacific markets are a sea of red (unlike the US election map on Tuesday night!), as investors ditch tech stocks after more than $3.2tn was wiped off the US stock market yesterday.
Today, Japan’s Nikkei stock index has slumped by almost 6% – its worst drop since April 7 2025 during the ‘liberation day’ tariff panic.
South Korea’s KOSPI is down 6.7%, and Taiwan’s TAIEX has dropped by 4.5% in a broad rout.
Christopher Forbes, head of Asia and Middle East at CMC Markets, called the market action “a bit of a disaster”, explaining (via Reuters):
After months of warnings that AI valuations were too high, and that the bubble might burst, US investors dashed to the exits en masse yesterday. The Nasdaq tech index slumped by 5.5%, while the Dow Jones Industrial Average (DJIA) dropped 1,833.06 points, or 3.44%, and the S&P 500 lost 4.36%.
Memory chip makers, who had been profiting from the AI boom, led the fallers – SanDisk slumped 22% and both Micron and AMD lost 17% of their value.
Chip giant Nvidia led the fallers on the DJIA, down over 9%.
Analysts pointed to policy uncertainty as Democrats are more critical of data centres, which could slow the rollout of AI investment – especially given public opposition to the sector.
Kyle Rodda, senior financial market analyst at Capital.com, says it was a “brutal sell-off” as fears about the future of the AI buildout gripped the markets.
So, it could be a ‘tin hats on’ day in the markets. Investors will also be watching the latest US jobs report, for clues into the health of America’s labour market.
The agenda
7am GMT: Lloyds house price index
9am GMT: UN’s FAO food price index
1.30pm GMT: US non-farm payrolls jobs report
3pm GMT: University of Michigan’s US consumer confidence report
