Tech stocks tumble as US midterms raise AI regulatory concerns, Canadian markets brace for data

Technology equities suffered a steep decline on Friday, driven by worries that the Democrats' victory in the US midterm elections could tighten AI regulation and slow data-centre construction. Wall Street futures were mixed, with the Dow edging lower after the previous day's sell-off erased nearly US$3 trillion in market value for S&P 500 companies, while the Nasdaq recorded its deepest one-day drop in 19 months.

TSX futures opened in the red following a 2 percent decline the day before, as investors looked ahead to October jobs figures. Canadian investors awaited earnings reports from firms including Enbridge, Brookfield Asset Management, Brookfield Infrastructure, Emera, Telus, Algonquin Power & Utilities, Atco, Constellation Software and Canadian Utilities. On Wall Street, attention turned to Moderna's upcoming results.

“We view Thursday’s selloff as reactionary, not a fundamental reset, driven by a collision of concerns around AI spend, policy and inflation,” said Jane Gibbons, equity strategist at Jefferies.

In Europe, the STOXX 600 fell 1.68 percent in morning trading, with Britain’s FTSE 100 down 2 percent, Germany’s DAX down 2.3 percent and France’s CAC 40 down 1.73 percent. In Asia, Japan’s Nikkei closed 5.96 percent lower and Hong Kong’s Hang Seng slipped 1.27 percent.

Oil prices steadied but were set for a weekly decline after the midterm results raised hopes of a de-escalation in the US-Israeli conflict over Iran, though ongoing vessel attacks in the Middle East kept a price floor. Brent crude for January rose 0.12 percent to US$98.41 a barrel, while WTI gained 0.39 percent to US$90.87.

Spot gold slipped 0.4 percent to US$4,070.59 an ounce, and US gold futures for December fell 0.8 percent to US$4,080.70.

The Canadian dollar weakened against the US dollar, trading at $1.4067 per US$1 after ranging between 71.00 and 71.45 US cents. The US dollar index rose 0.48 percent to 102.04. The euro fell 0.51 percent to US$1.1164 and the British pound dropped 0.48 percent to US$1.3387. US 10-year Treasury yields were up at 5.875 percent.

Upcoming data includes Canadian employment for October, US non-farm payrolls, Canada’s Ivey PMI, the University of Michigan consumer sentiment survey, and US consumer credit figures.