AI Selloff Hits Wall Street and Asia as Bank of England Raises Rates

US tech stocks suffered their worst day in years on AI spending worries after the midterms, and the selloff spread to Asian markets. The Bank of England raised rates to 4% while the Fed and ECB stayed on hold.

Maz Vantage · 6 Nov 2026

Wall Street's worst day in years

US equities sold off sharply on Thursday as concerns about artificial intelligence spending met the aftermath of the midterm elections. The BBC reports that the Nasdaq composite closed down more than 5.5%, losing an estimated $2.5tn in market value, in its worst day since 2025 (BBC). MarketWatch estimated the S&P 500 lost about $2.9 trillion in market capitalisation, the largest one-day loss of market value, and described it as the worst day for tech stocks since 2020 (MarketWatch).

The BBC links the move to Democratic wins in the Senate and House, after campaigns that included ballot measures aimed at restricting data-centre and AI development, on top of existing doubts over whether heavy AI investment will pay off (BBC). MarketWatch also noted a combined $456 billion two-day loss in Tesla and SpaceX as investors worried a divided Washington could hinder Elon Musk's businesses (MarketWatch). Investing.com reported that the tech selloff has erased hedge fund gains, prompting risk cuts and layoffs, and that bonds drew haven demand (Investing.com, Investing.com). The Guardian's live coverage said President Trump blamed the Democrats for the decline (The Guardian).

Asia follows lower

The selloff spread to Asia on Friday. The Nikkei 225 closed down 6.04% (Investing.com). According to the BBC, South Korea's Kospi fell more than 8% in the morning, triggering a circuit breaker, before trimming losses to about 5%; SK Hynix and Samsung fell sharply, and Taiwan's Taiex had its biggest weekly decline since 2001 per LSEG data (BBC). Investing.com attributed the Asian weakness to the AI rout hitting Japan and South Korea (Investing.com).

Central banks: Fed and ECB on hold, Bank of England hikes

The Federal Reserve kept the federal funds target range at 3-3/4 to 4 percent on 28 October by a 10-2 vote, describing economic activity as expanding at a strong pace and inflation as elevated (Federal Reserve). The European Central Bank held its deposit facility rate at 2.50% on 29 October, citing rising energy prices as an upside risk to inflation and a downside risk to growth, and said it is not pre-committing to a rate path (ECB). The ECB also announced that President Christine Lagarde will step down on 7 February 2027 (ECB).

The Bank of England raised Bank Rate to 4% from 3.75% on a vote of 8-1, with one member preferring a larger increase. It cited the Middle East conflict and higher energy prices and said UK CPI inflation, at 3.5% in September, is expected to rise to around 5% by mid-next year (Bank of England). The BBC noted most analysts had expected the move, and the pound reached its highest level against a basket of currencies since the Brexit referendum (BBC, BBC).

Oil and companies

Investing.com reported that oil rose on fresh tanker attacks but was heading for a steep weekly loss (Investing.com). On company news, Tesla's Elon Musk said Cybertruck production at the Texas gigafactory will be wound down next year (Investing.com). Some AI-related names rebounded after earnings, including Cloudflare after its fastest sales growth in nearly four years (MarketWatch).

Sources

Wall Street's worst day in years

Asia follows lower

Central banks: Fed and ECB on hold, Bank of England hikes

Oil and companies