Market report: Election euphoria turns into election hangover

The broker IG Markets estimates the leading German index 0.8 percent lower to 26,105 points before the opening of Xetra trading. On Thursday, the DAX first rose to a record high of almost 26,693 points, then things went backwards: in the wake of the turbulence on the US stock exchanges, it finally went out of trading with a loss of 0.4 percent to 26,325 points.

The DAX is also likely to fall back based on Wall Street's extremely weak guidance. The Democrats' victory has stoked fears of stricter regulation of artificial intelligence (AI) and sent technology stocks plummeting.

The Nasdaq technology exchange index fell by 5.5 percent to 24,315 points. This was the largest daily percentage loss in 19 months. The broader S&P 500 lost 4.4 percent to 7,354 points. The US leading index Dow Jones fell 3.4 percent to 51,523 points. The previous day's gains in the US indices have evaporated.

The sell-off is currently continuing in Asia. Japan's Nikkei falls by almost six percent. The South Korean Kospi fell by more than five percent. Because of the heavy price losses, the Seoul Stock Exchange suspended trading for 20 minutes.

The focus is on concerns about the future of the AI ​​boom, notes market observer Salah-Eddine Bouhmidi from broker IG. Investors fear that following the Democrats' election victory, stricter requirements could slow down the expansion of data centers and delay projects.

“These political risks coincide with the already simmering uncertainty as to when the billion-dollar investments in artificial intelligence will pay off sufficiently,” said Bouhmidi. "Delays in the expansion could put an additional strain on investors' patience. The stock market is increasingly assessing the possible economic side effects of the new political majority," explains the expert.

Market analyst Jochen Stanzl from Consorsbank points out another circumstance: "Exactly what investors have been fearing for months has happened on Wall Street: that the cluster risk from a few tech heavyweights will take revenge and drag the major indices down with them if they fall more sharply," he commented.

What should investors do now? “Long-term investors should not be unsettled by yesterday’s setback,” advises Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank. In the past, election results have rarely had a lasting impact on the stock markets, the expert adds.