Macro Update
Nasdaq suffers worst selloff in 18 months: The Nasdaq Composite plunged 5.5% on Thursday, confirming a correction as the Democrats’ midterm sweep fuelled concerns over tighter AI regulation and slower data centre construction. The Nasdaq 100 tumbled 6.4%, wiping $2.5trn from market value, while the S&P 500 fell 4.4%.
Chipmakers and neocloud stocks plunge as AI fears intensify: The Philadelphia semiconductor index dropped 12% to its lowest level in more than six months, with Nvidia falling 9% and AMD 17%. CoreWeave slid 10% as its five-year credit default swap spreads hit a record, while UBS estimated that around 30% of expected US data centre capacity additions in 2028 could be at risk.
Asian equities extend global technology selloff: Japan’s Nikkei sank 6% to 57,434.77, its worst weekly performance since March 2020, while Taiwan’s benchmark ended 4.5% lower after plunging more than 8% earlier, bringing its weekly loss to 12.2%, the largest since 1991. Authorities in Taipei and Seoul moved to contain the selling.
Investors seek shelter in bonds and traditional havens: US, Japanese and Chinese government bonds rallied, with the US two-year yield falling around 10 basis points to its lowest since 10 September and China’s 10-year yield hitting a record low. The yen climbed to a one-week high of 157.27 per dollar, while the dollar index rose 0.25% to 101.76.
Oil rebounds on Hormuz supply fears but remains set for weekly plunge: Brent crude rose 1.3% to $99.58 a barrel after briefly topping $100, as renewed tanker attacks in the Strait of Hormuz revived concerns over supply. However, prices remained on track for a 12% weekly decline on hopes that the Democratic victory could help de-escalate the Iran war.
Gold retreats as investors raise cash ahead of US jobs data: Spot gold fell 1.1% to $4,044.09 an ounce as stronger oil prices fuelled inflation concerns and investors sold positions to meet margin calls. Bullion remained on track for its strongest week since late August, while markets priced roughly a 70% probability of a Fed rate hike in December ahead of Friday’s non-farm payrolls report.