Global equity markets sold off sharply this week as worries about the artificial intelligence sector deepened, following Democratic Party victories in the US midterm elections that raised expectations of tighter regulation for the AI industry, according to Stockbit Snips. The pullback spread from technology shares into the commodities that underpin AI infrastructure, with copper and tin both falling. The selloff also hit Asian markets hard on Friday (6/11), though Indonesia's benchmark index moved in the opposite direction.
Why it matters
The AI trade has been one of the dominant drivers of global equities, and the midterm outcome has introduced a policy risk that investors had largely priced out. President Donald Trump had backed unregulated expansion of the AI industry and dismissed concerns about AI safety as a "hoax," Stockbit Snips reports. The Democratic Party, by contrast, campaigned on controlling AI's side effects, including the electricity price increases and water use by data centers that have drawn complaints from residents in several states.
That shift in the political backdrop now threatens to slow the pace of AI development — and, by extension, demand for the metals used in data centers and power infrastructure.
Nasdaq's worst session since 2020
On Thursday (5/11), the Nasdaq plunged 6.4%, its steepest one-day decline since March 2020, while the semiconductor index (SOX) dropped 12%, according to Stockbit Snips. The damage was not confined to the US. In Asia, South Korea's Kospi fell as much as 8.8% on Friday (6/11), triggering a trading halt before rebounding to close down 5.3%. Taiwan's Taiex shed 3.2%.
The commodity market felt the knock-on effect. Copper fell 1.2% to US$13,843 per ton on Thursday (5/11), extending a weekly decline of 3.6% and touching its lowest level since July. Tin dropped 3.2% on the same day and has lost 8.5% over the week, Stockbit Snips reports.
The risk of a slower AI buildout weighs on listed miners exposed to these metals. Stockbit Snips flags Amman Mineral International ($AMMN) and Merdeka Copper Gold ($MDKA) on the copper side, and Timah ($TINS) on tin. On Friday (6/11), those three stocks fell 1.1%, 5.2% and 2.6% respectively.
India and Indonesia draw attention as domestic plays
Not every emerging market suffered equally. Bloomberg highlighted India's stock market, which gained nearly 7% this week, benefiting from its role as an "anti-AI trade" given its predominantly domestic exposure and the backdrop of falling oil prices, according to Stockbit Snips. The Democratic midterm wins have also increased expectations that the Iran war could end sooner, which could push oil prices lower still.
More broadly, markets that rely on domestic demand — India and Indonesia among them — may become more attractive if negative AI sentiment persists and oil prices continue to soften, Stockbit Snips reports.
Indonesia's IHSG rose 0.4% on Friday (6/11) even as markets with large or direct AI exposure corrected, recording net foreign buying of roughly Rp329.3 billion. Even so, AMMN, MDKA and TINS weakened.
Bond yields signal risk premium, not inflows
The picture in Indonesian government bonds complicates the usual assumption that falling US yields draw capital into emerging markets. The US Treasury 10-year yield has eased to 4.84%, yet Indonesia's 10-year government bond yield remains at 7.74% and recently touched its highest level in four years.
According to Stockbit Snips contributor HendraSetiawan08, the elevated yield reflects investors demanding a larger risk premium rather than a rush to enter the market. Global institutional investors weigh risk-adjusted returns and factor in rupiah weakness, fiscal conditions, debt financing needs, inflation, the direction of interest rates and country risk premium — meaning the government must offer more expensive yields to attract buyers, raising its borrowing costs.
For the IHSG, that dynamic can restrain foreign inflows, add to net foreign selling, erode foreign investors' returns through rupiah depreciation, pressure the fair value of high price-to-earnings stocks and narrow fiscal room, according to the same commentary. HendraSetiawan08 lists five indicators worth monitoring: the US Treasury 10-year yield, the Indonesian 10-year yield, the USD/IDR rate, foreign flows and Indonesia's 5-year credit default swap.
Investors will be watching whether the regulatory expectations priced in after the midterms translate into actual policy, and whether metals demand — and the miners tied to it — stabilizes once the initial shock passes.
