Major Asian stock indices staged a significant recovery on Monday, bouncing back from a brutal tech sell off sparked by the Democratic Party’s decisive win in the U.S. midterm elections. The rally followed a tentative recovery on Wall Street late last week, providing much needed relief to investors who watched billions vanish during a massive retreat from artificial intelligence stocks. Taipei saw the most dramatic turnaround with the Taiex surging nearly five percent, while Tokyo’s Nikkei 225 climbed more than two percent.
The previous volatility was driven by fears that new Democratic control in Washington could lead to regulatory hurdles or slower development for the massive data centers required to sustain the AI boom. This anxiety triggered a staggering 2.5 trillion dollar wipeout on Wall Street last Thursday, which quickly spread across the Pacific, sending Japanese and South Korean markets plummeting several percentage points on Friday alone. While some markets like Hong Kong and Seoul struggled to maintain their early momentum today, the general sentiment suggests that many traders believe the worst of the correction is over.
Analysts suggest that while financial conditions have tightened and political uncertainty looms, the fundamental appetite for AI technology remains robust. Cameron Chui of JP Morgan Private Bank noted that while there are legitimate concerns regarding credit availability for newer cloud firms, a meaningful valuation reset has already occurred. He indicated that current price levels now better reflect these risks, leaving room for growth particularly in Taiwan and South Korea despite long term earnings uncertainties heading toward 2028.
Adding another layer of complexity to the market mood, shares faced fresh pressure due to internal turmoil at chip giant Nvidia. The company announced an independent investigation into CEO Jensen Huang following reports of a romantic relationship with a woman suspected of being a Chinese spy. Although Nvidia’s board expressed continued confidence in Huang and stated they saw no evidence that corporate secrets were leaked, the probe created immediate ripples in futures trading as investors weighed the potential impact on national security protocols and leadership stability at one of the world’s most influential tech firms.