Stocks edge lower as investors digest Democratic midterms sweep

{"text":[[{"start":10.24,"text":"Global stocks edged lower on Wednesday and the dollar slid as investors digested a wave of Democratic victories in the US midterm elections that some think could pose a new threat to the AI boom."}],[{"start":22.597,"text":"Futures tracking the tech-heavy Nasdaq 100 index pointed to a 0.2 per cent decline when markets open in New York on Wednesday, while futures for the broader S&P 500 were down 0.1 per cent."}],[{"start":34.134,"text":"Markets had rebounded from steeper losses overnight as results rolled in, as investors weighed the potential for tighter AI regulation against the prospect of a divided government, with Democrats holding a majority in both houses of Congress and Republican Donald Trump still in the White House, a set-up that typically creates gridlock in Washington and has historically been benign for financial markets."}],[{"start":58.046,"text":"“Normally a divided government is good for stocks as it means fewer policy changes, but this time, I wonder if the Democrats might push through AI regulation,” said Priya Misra, a portfolio manager at JPMorgan Asset Management."}],[{"start":71.6,"text":"“Given how bipartisan the pushback against data centres is and how much the economy and stock markets are dependent on AI, I worry that this is bad news for stocks.”"}],[{"start":82.64,"text":"The development of the data centres that are vital to the AI industry has been a flashpoint for voters across America, with investors paying particular attention to the outcome of contests at state level, where decisions on granting permits for infrastructure are made."}],[{"start":96.08,"text":"Investors said the magnitude of Democratic gains, as well as big state-level victories in AI hubs such as Texas, were likely to slow the construction of new data centres and could even bring about new regulation of the industry."}],[{"start":109.258,"text":"With Democrats winning control of the Senate and on track to secure the House of Representatives, the dollar slipped 0.5 per cent against a basket of major currencies to its lowest level in more than a month as investors bet that the new political landscape could hurt US economic growth — which has become highly dependent on the AI boom."}],[{"start":null,"text":"

"}],[{"start":127.76,"text":"However, the scale of Democrats’ triumph had averted a “worst-case scenario” in which Trump challenged the legitimacy of the results, according to Kristina Hooper, chief market strategist at Man Group."}],[{"start":139.681,"text":"“This is a resounding blue sweep that should preclude any material challenge to the election results,” she said."}],[{"start":146.381,"text":"In Asia, tech-heavy markets fell, with Japan’s Nikkei 225 index dropping 1.4 per cent. South Korea’s Kospi fell as much as 4 per cent before recovering to trade flat. Futures tracking the Stoxx Europe 600 fell 0.3 per cent."}],[{"start":163.28,"text":"But the prospect of the Democrats seizing control of Congress comes at a critical juncture for tech stocks, with investors already questioning whether the historic borrowing binge driving the AI boom will pay off."}],[{"start":176.82,"text":"After hitting record highs in October, the Nasdaq 100 entered correction territory this week with a near 10 per cent drop."}],[{"start":183.68,"text":"On Wednesday shares of Asian-listed companies tied to AI boom were under pressure in early trading."}],[{"start":190.18,"text":"SoftBank, which holds a roughly 13 per cent stake in OpenAI, fell as much as 10 per cent before paring losses. Samsung Electronics and SK Hynix, the world’s biggest makers of AI memory chips, declined 0.7 per cent and 0.1 per cent, respectively."}],[{"start":207.778,"text":"“Asia is not very good at digesting US political risk or news flow,” said William Bratton, head of Asia-Pacific cash equity research at BNP Paribas, adding that the market had “overreacted”."}],[{"start":222.4,"text":"Data visualisation by Haohsiang Ko in Hong Kong"}],[{"start":228.16,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793781266_4177.mp3"}