Global Stocks Plunge as AI Fears Grip Markets After Midterm Results

Global equity markets are tumbling sharply as fears of an AI slowdown and the Democrats' midterm success drive a broad flight from risk assets. Asian and European markets are following Wall Street's steep declines, with the FTSE down 1.9% in morning trade. The selloff is being described as an AI panic gripping markets, with technology valuations under pressure as investors reassess the growth outlook for artificial intelligence-related stocks.

The synchronized falls across Asia, Europe and the US point to a rapid rise in risk aversion, with portfolios exposed to high-valuation tech names bearing the brunt. The political backdrop — Democrats' midterm triumph — is adding to uncertainty, compounding the AI-driven anxiety that has unsettled investors.

For investors, the key concern is whether this is a short-term correction or the start of a deeper de-rating in AI-linked equities that have driven much of the market's gains. The sharp falls in the FTSE and other major indices suggest investors are moving quickly to reduce exposure rather than waiting for clarity.

What to watch next: whether Wall Street extends its losses into the next session, whether AI bellwethers stabilize or lead further declines, and how markets digest the political shift following the midterm results. Any sign of contagion into credit or broader risk assets would heighten concerns about a more prolonged downturn.