Midterm Returns Hit Asian Tech: Nikkei Falls 2.9%, Nasdaq Futures Drop 1.8% and the Dollar Weakens
Investors worry that a Democratic Congress could slow AI infrastructure spending and complicate crypto legislation, while strategists say earnings, growth and rates matter more than the vote.
Asian technology stocks fell and the U.S. dollar weakened to a one-month low on Wednesday as early midterm results pointed to Democratic gains, reviving worries about future AI spending and crypto policy. Japan's Nikkei 225 fell 2.9% and South Korea's Kospi fell 1.5%, while Nasdaq-100 futures dropped 1.8%. Control of Congress had not been decided, and the figures below were moving during the Asian session.
Asia: chip stocks lead the decline
| Market | Move | Notes |
|---|---|---|
| Japan Nikkei 225 | -2.9% | Trading resumed after a public holiday; the index was near 61,200 in the morning |
| South Korea Kospi | -1.5% | Reversed early gains; SK hynix fell about 3.7% and Samsung Electronics about 1.8% |
| Singapore STI | -1.2% | |
| Taiwan Taiex | -0.3% | |
| MSCI Asia-Pacific ex-Japan | -0.5% | Regional benchmark, early Asian session |
The tech declines extend a weak stretch for AI-linked stocks. The Nikkei also fell about 2.8% on Oct. 30 after soft U.S. earnings raised doubts about returns on AI spending.
U.S. futures, rates, dollar and crypto
| Asset | Move | Level or context |
|---|---|---|
| Nasdaq-100 futures | -1.8% | |
| S&P 500 futures | -0.8% | |
| 10-year Treasury yield | Down about 6 bp | About 4.9%, the lowest since early September |
| U.S. dollar index | -0.3% | About 101.4; the euro rose 0.4% to $1.1239 |
| Bitcoin and Ethereum | Each down more than 1% | |
| Invesco Solar ETF (TAN) | +3.3% | After hours, as traders priced in friendlier clean-energy policy |
By our calculation, Nasdaq-100 futures are falling about one percentage point more than S&P 500 futures.
What the early results show
Democratic Senators Jon Ossoff in Georgia and Mark Warner in Virginia were re-elected, and Roy Cooper was projected to flip a Republican-held Senate seat in North Carolina. Democrats were favored to take the House, while the Senate remained closely contested, with Democrats needing a net gain of four seats for control. The final balance of power was still uncertain as counting continued.
Why markets are reacting
- AI spending. Investors fear Democratic control could slow AI infrastructure investment, and analysts say it could bring tighter oversight of AI data center development. AI stocks were already facing valuation and profitability concerns.
- Crypto policy. The CLARITY Act market-structure bill failed a Senate cloture vote in September. Analysts at TD Cowen have called a Democratic sweep the most negative scenario for crypto legislation.
- Strategists. UBS cautioned that earnings, economic growth, AI investment, inflation and interest rates matter more than election outcomes. State Street favored diversified exposure to financially resilient companies over concentrated election bets.
What to watch
- Race calls. Whether Democrats win the House outright and how many Senate seats they gain.
- U.S. open. Whether the futures declines in Nasdaq and chip stocks hold once Wall Street trades.
- Dollar and yields. Whether the 10-year yield and the dollar index extend their declines.
- Related coverage. See our Week Ahead, the Nasdaq research note and last night's after-hours movers recap.
Sources: Market moves are drawn from exchange and market data during the Asian session and change by the minute. Race calls come from election-results reporting and may be revised as votes are counted. The strategist views are as reported on Wednesday. Items labeled by our calculation are our own arithmetic. This article is informational only and is not investment advice.
Readers also read
Week Ahead: Midterms, Apple and AMD Earnings and the Jobs Report Test a Shaken Market
ResearchNasdaq's Worst Month Since March 2025: What the Tech Selloff Means and What to Watch Next Week
RecapAfter-Hours Movers: Flywire Jumps 13% and Skyworks Sinks 15% as Arista, Duolingo and Procore Rally
MarketCatalyst is not a registered investment advisor and does not manage client assets. Content on this platform is provided for informational and educational purposes only. It is not investment advice, and MarketCatalyst is not a stock-picking or trade-alert service. Trading stocks and options involves risk, including the possible loss of principal. Consider your own goals, time horizon, and risk tolerance, and consult a qualified financial advisor before making any investment decision.