The AI selloff went global last week. In the US, Democrats swept Congress in the midterm elections on Tuesday, November 3, surfing on a huge wave of voter hostility toward new data centers. On Thursday, investors dumped the AI trade worldwide, and Asia’s chipmakers took the brunt of the wipeout. Overseas earnings are still climbing, but valuations keep falling. We see the AI backlash as a speed bump, not a roadblock, at home and abroad. Here’s more:
I. Stock Market Performance
Global sector leadership flipped this week according to the FTSE indexes (chart). Defensive sectors held up best, with Real Estate up 2.2% and Consumer Staples up 0.7%, while Consumer Discretionary led with a 2.7% gain. Technology (-6.7%) and Telecommunications (-7.4%) were near the bottom. Energy was the worst performer, down 10.4%, as fears of a post-midterm re-escalation in the Middle East faded. The FTSE World index fell 2.5%.
