Global equity markets suffered a steep sell-off this week as concerns about the artificial intelligence sector deepened, according to Stockbit Snips. The trigger was the Democratic Party's victory in the US midterm elections, which raised expectations of tighter regulation for the AI industry.
The Nasdaq fell 6.4% on Thursday (5/11), its worst single-day drop since March 2020, Stockbit Snips reported. The semiconductor index (SOX) lost 12% over the same session.
Why it matters
The retreat shows how quickly sentiment around AI has become a market-wide risk factor rather than a narrow tech story. Stockbit Snips notes that the sell-off spread beyond equities into the commodities that underpin AI infrastructure, and it is now shaping how investors view everything from Korean chipmakers to Indonesian copper miners.
The political backdrop explains the shift. President Donald Trump had backed an unregulated expansion of the AI industry and dismissed safety concerns about the technology as a "hoax," according to Stockbit Snips. The Democratic Party, by contrast, campaigned on controlling AI's side effects, including the higher electricity prices and water use from data centers that have become a grievance for residents in several US states.
Asia's markets take the hit
The damage was visible across Asian exchanges on Friday (6/11). South Korea's Kospi plunged as much as 8.8%, triggering a trading halt, before recovering to close down 5.3%, Stockbit Snips reported. Taiwan's Taiex shed 3.2%.
The commodities tied to AI buildouts also weakened. Copper fell 1.2% to US$13,843 per ton on Thursday, extending a 3.6% weekly decline and touching its lowest level since July, according to Stockbit Snips. Tin dropped 3.2% on Thursday and has lost 8.5% over the week.
The risk of a slower pace of AI development, and the resulting pressure on the commodities that support it, could weigh on related mining stocks, Stockbit Snips noted. It named Amman Mineral Internasional ($AMMN) and Merdeka Copper Gold ($MDKA) in copper, and Timah ($TINS) in tin.
The pressure was evident on Friday. Even as the Jakarta Composite Index (IHSG) gained 0.4% with net foreign buying of roughly Rp329.3 billion, AMMN fell 1.1%, MDKA dropped 5.2% and TINS declined 2.6%, Stockbit Snips reported.
India gains as an "anti-AI trade"
Not every emerging market suffered. Bloomberg highlighted India's stock market, which rose nearly 7% this week, according to Stockbit Snips. The outlet attributed the gain to India's position as an "anti-AI trade," with its heavy domestic exposure benefiting from the slide in oil prices.
The Democratic midterm win also raised expectations that the Iran war could end sooner, a scenario that could push oil prices lower still, Stockbit Snips reported. More broadly, markets that lean on domestic demand, such as India and Indonesia, could become more attractive if negative AI sentiment and softer oil prices persist.
Bond yields tell a different story
The AI-driven sell-off was not the only force at work in Indonesian markets. Stockbit Snips highlighted commentary from Stockbit user Hendra Setiawan on the gap between US and Indonesian bond yields.
The US 10-year Treasury yield fell to 4.84%, but Indonesia's 10-year government bond yield held at 7.74% and at one point touched its highest level in four years, according to Stockbit Snips. In theory, lower US yields should encourage capital flows into emerging markets. Instead, the elevated Indonesian yield reflects a larger risk premium rather than a rush of investors into the market, Setiawan argued.
Investors weigh rupiah weakness, fiscal conditions, debt financing needs, inflation, the direction of interest rates and country risk premiums, Stockbit Snips reported. That means the government must offer more expensive yields to attract buyers, raising its borrowing costs.
For the IHSG, the situation could restrain foreign inflows, add to net foreign selling, erode foreign investors' returns through rupiah weakness, pressure the fair value of high price-to-earnings stocks and narrow fiscal room, according to Stockbit Snips. Setiawan listed five indicators to monitor: the US 10-year Treasury yield, the Indonesian 10-year yield, the USD/IDR rate, foreign flows and Indonesia's 5-year credit default swap.
Setiawan, a Stockbit user and YouTuber, regularly posts notes on the Indonesian capital market on Stream. His YouTube channel focuses on technical analysis, while his Stream writing is aimed at beginners and offers personal commentary on economic news, according to Stockbit Snips.
What to watch
Investors will be watching whether the regulatory expectations priced in after the midterms translate into actual policy, and whether copper and tin hold their recent lows. In Indonesia, the spread between US and local bond yields, the rupiah and foreign fund flows remain the key signals to track.
