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This Is Money columnist Maggie Pagano reported that US and overseas markets fell sharply after the Democrats won the US midterm elections. The VIX rose 70% from its pre-election level, while South Korea’s Kospi dropped 8% in early trading and triggered a temporary halt. The report links investor concern to potential regulation and AI spending, but the scale and durability of the market reaction remain uncertain.
Global stock markets fell after the Democrats won the US midterm elections, according to a report by This Is Money columnist Maggie Pagano, with US volatility rising and South Korea’s Kospi index dropping 8% in early trading. The report says the sell-off reflected investor worries about possible technology regulation and reduced spending on artificial intelligence infrastructure, though it is not yet clear whether the moves mark a lasting change in market expectations.
Pagano reported that the VIX index rose 70% following the election. The gauge tracks expected near-term volatility in the S&P 500, so the rise indicated sharply increased demand for protection against potential US share-price swings. The report described Thursday’s US trading as one of the market’s worst days, but did not provide a precise index-level loss for the broader market.
Investor selling was also evident in individual shares. US retail investors sold a net $338 million in individual stocks on Thursday, a figure the report said was thought to be their largest one-day net sell-off since March 2020. The Philadelphia semiconductor index fell 12%, which Pagano described as its second-largest fall on record. Some large technology stocks had recovered part of their losses by Friday’s opening, the report said.
The downturn spread beyond the United States. The FTSE 100 closed at 10,674, down 109 points, after recovering some earlier losses. South Korea’s Kospi fell 8% in early trading, prompting a circuit breaker and a temporary trading halt. Shares in Samsung Electronics and SK Hynix fell amid concern that a slowdown in AI investment could hit demand for their chips.
The market reaction matters because it connects political uncertainty with doubts about the scale and returns of AI investment. Chipmakers and other technology companies have been major beneficiaries of demand for data centres and AI computing. If investors expect regulation to tighten or companies to cut spending, share prices across the supply chain may remain sensitive to news about policy, financing and business demand.
South Korea’s trading halt also shows how a rapid fall can create risks beyond listed companies’ valuations. Pagano reported that many retail investors in the country had borrowed to buy shares. Falling prices can leave leveraged investors facing margin calls or forced sales, potentially adding pressure to an already falling market. The report says the government has responded with temporary measures intended to limit that risk.
These events do not establish that the AI investment cycle has peaked or that a broad bear market has begun. The VIX and share-price moves describe a period of heightened market stress; they do not, on their own, establish what caused every investor’s decision or predict how markets will perform next.
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Election Shock Meets AI Spending Concerns
The report places the sell-off immediately after the Democrats’ midterm election victory. It says investors feared the party might impose tougher regulation on major technology companies. Those fears were presented as a market interpretation, not as a confirmed policy announcement in the source material. The report does not specify which proposed rules investors were responding to.
Attention also turned to the cost of building AI systems and the data centres and chips required to run them. Pagano cited questions about whether large technology companies, including Nvidia, Microsoft and Google, can generate the profits they have promised. She also referred to approximately $3 trillion in borrowing by technology companies to fund AI development; the article did not detail how that figure was calculated or distributed among firms.
Pagano cited hedge fund manager Paul Singer as having warned on election day that AI enthusiasm, rising inflation and the US budget deficit could contribute to a bear market. That warning is a view attributed to Singer, not evidence that a bear market has started. The report also said Anthropic’s reported $2 trillion valuation was being cut and that its IPO roadshow could be delayed, but it supplied no company confirmation for either point.
“The Democrat’s blue tsunami turned stock markets red across the world – from London to Busan.”
— Maggie Pagano, This Is Money columnist
How Long Will the Sell-Off Last?
It remains unclear whether the declines reflect a short-lived reaction to the election or a more sustained reassessment of AI-related valuations. The source report does not provide later closing figures for the VIX, the Kospi or the affected technology shares, and it does not establish how much of the sell-off was caused by election concerns rather than other market factors.
Several AI-related details also require caution. The report gives no underlying documentation for the claimed $2 trillion Anthropic valuation, its reported reduction, or the possible delay to an IPO roadshow. It also does not identify the lenders or companies behind the cited $3 trillion in AI-related borrowing. No detailed policy proposals or confirmed regulatory actions are included, so the potential effect of Democratic control remains uncertain.
Investors Watch Policy and AI Demand
Investors will be watching for further trading data and for signs that volatility is easing or continuing across US, Asian and European markets. South Korea’s reported emergency measures are due to start on Monday and are intended to let brokers waive collateral requirements on margin loans for three months. The source does not specify how widely brokers will apply the option or what effect it will have.
Market participants are also likely to focus on company updates about AI spending, data-centre investment and expected returns, alongside any formal details of technology policy. Those developments may help show whether the sell-off changes financing plans or valuations. Until further figures and statements are available, the report supports describing a sharp post-election market reaction—not a confirmed end to the AI investment boom or a settled forecast of a global bear market.
Key Questions
What happened to markets after the Democrats won the midterms?
According to Maggie Pagano’s report, US shares fell sharply and the decline spread to overseas markets. The VIX rose 70%, while the Kospi fell 8% in early trading and briefly halted trading.
What is the VIX, and what did its rise indicate?
The VIX tracks expected near-term volatility in the S&P 500. The report said it rose 70% after the election, indicating greater expected volatility; it did not give the comparison window in the quoted passage.
Why were chip companies affected?
The report said investors feared that technology companies could reduce AI and data-centre spending. Samsung Electronics and SK Hynix were cited as major chip suppliers exposed to that concern. The report does not establish that spending cuts have occurred.
Does the sell-off mean the AI boom is over?
No. The report describes a sharp market reaction and raises questions about AI valuations and expected profits, but it does not confirm that investment has peaked or that the AI sector’s growth has ended.
What happens next in South Korea?
The report says emergency measures are scheduled to begin on Monday, allowing brokers to waive collateral on some margin loans for three months. Their implementation and effect remain to be seen.
Source: thisismoney.co.uk
