The rout was swift and merciless.
Japan’s Nikkei 225 sank 5.86% in early morning trading on Friday, skidding into technical bear market territory as a vicious selloff in semiconductor names tore through Asian trading floors. South Korea’s tech-heavy Kospi dropped 8.55%, tripping market circuit breakers as trading halted abruptly. Samsung Electronics and SK Hynix each shed more than 9%. From Tokyo to Seoul, institutional capital fled hardware suppliers that had anchored the artificial intelligence rally for over a year.
Yet the damage was not confined to Northeast Asia. The MSCI Asia Pacific Index dropped 2.9%, tracking overnight devastation in New York. In India, the GIFT Nifty hinted at a steep gap-down start for domestic equities, while Hang Seng futures fell 1.6%. Hong Kong partially decoupled from the plunge as fund managers rotated out of hardware supply chains and into discounted Chinese internet platform shares. Currencies remained subdued under the liquidity strain—the Japanese yen traded at 157.65 per dollar, while the offshore yuan hovered at 6.6643 per dollar.
Panic migrated directly from Wall Street. On Thursday, the Nasdaq 100 tumbled 6.4% in its steepest single-day drop since March 2020, erasing $2.3 trillion in equity value. The broader S&P 500 plunged 4.4%—its sharpest contraction since the April 2025 tariff shock. A key benchmark of semiconductor manufacturers plummeted 12%, weighed down by heavy liquidation in Nvidia, Qualcomm, and Arm Holdings. That dragged the Philadelphia Semiconductor Index down nearly 16% for the week, pacing toward its worst weekly performance since April of last year.
Political shifts in Washington triggered the unwinding. Following a Democratic sweep of Congress in the US midterm elections, institutional funds liquidated extended positions on expectations of tighter antitrust and environmental regulations on digital infrastructure. In Texas, newly elected Governor Gina Hinojosa called for an immediate moratorium on data centre construction—a direct blow to high-density server farm projects. Her victory, alongside Democratic wins across several gubernatorial races, exposes nearly half of all planned US artificial intelligence data centre expansions to local regulatory resistance and project freezes.
Macroeconomic signals offered equity bulls zero cover. Weekly US initial jobless claims dropped below all consensus forecasts, according to Labor Department data, reinforcing bets that the monetary policy path will remain tight. Federal Reserve Bank of Cleveland President Beth Hammack said borrowing rates must stay restrictive to bring inflation back to the central bank's target, adding that more frequent policy moves could lower the risk of falling behind. Commodity desks absorbed their own tremors; Brent crude traded at $99.32 a barrel and US crude held above $91 a barrel. While Nasdaq 100 futures inched up 0.3% to signal potential consolidation, floor traders across Asia now wait on Friday's US payrolls report for definitive direction.