AI Rout Spreads to Asia as Hedge Funds Cut Risk
Friday, 6 November 2026 — The AI-led stock selloff spread to Asia, and Japan's Nikkei 225 fell 5.8%, its biggest one-day loss since April 2025, on concern about tighter US regulation of the industry (BBG). On Thursday, the S&P 500 fell 4.4%, and the Nasdaq 100 lost $2.3 trillion of market value (BBG). Hedge funds are unwinding crowded trades, Japanese wages rose at the fastest pace since 1997 (Reuters) and Brent rebounded to around $100 a barrel (BBG).
The US jobs report lands today at 14:30 CET, and markets react within seconds. GGMA Squawk & Chat calls out the market-moving headlines live, with LiveSquawk's audio, our macro desk and a members' chat, on desktop and on the iPhone.
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Chart of the day: the US jobs report
US payrolls, the unemployment rate and average hourly earnings since 2023, with the consensus for the October report as circles. Wage growth may matter more than the headline numbers. Source: US Bureau of Labor Statistics, Macrobond, GGMA.
Our five themes for the day:
The AI rout has become a global repricing. The S&P 500 fell 4.4% on Thursday after voters backed limits on data centres, and Asia's chip-heavy markets took the next leg down. About 40% of pending US data-centre capacity sits in states whose new governors promised to stop or pause construction. A further slide could tighten credit for data-centre borrowers, where one CoreWeave bond already yields above 17%. To be sure, Nasdaq 100 futures have steadied, and one chief investment officer said some Democrats are already dialling back their comments on a data-centre moratorium.
Hedge-fund deleveraging could amplify the move. Stock-picking funds made their largest active cut in over a decade in October, before Thursday's losses, and volatility-control funds could sell about $135 billion of US equity futures in the next two days, one bank's models show.
Japan's wage data came in well above expectations, with nominal pay up 4.6% y/y and real pay up 2.2% y/y. In our view, that strengthens the case for a BoJ rate rise on 18 December. Money markets price in only a 52% chance, down from 79% on Thursday, because of the equity rout, so calmer markets could quickly bring the odds back up. Base pay for full-time workers, up a record 3.1% y/y, is the better guide, as the labour ministry put the jump in special payments down to a statistical quirk.
Oil rebounded, with Brent near $100 a barrel after Wednesday's more than 8% decline. Hopes for a deal may be running ahead of the facts: Iran is reviewing proposals from mediators, but wants the US blockade lifted before it fully reopens the Strait of Hormuz. A durable settlement could push prices lower, while a breakdown could quickly reverse this week's drop.
The US jobs report at 14:30 CET could decide whether money markets keep pricing in a 67% chance of a Fed rate rise in December, down from 79% on Thursday. Economists expect payrolls to rise 70k and unemployment to stay at 4.2%, with wage growth easing to 2.9% y/y. The latter may matter more than the headline numbers, as the Fed is more focused on inflation than growth right now. A surprising uptick in wages could move a December rate rise back into focus.
In brief
The AI-led stock selloff spread to Asia, and Japan's Nikkei had its biggest one-day loss since April 2025.
Thursday's rout wiped a record amount off the Nasdaq 100 after voters backed limits on data centres.
Hedge funds are unwinding crowded trades after a bruising October.
Japanese wages rose at the fastest pace since 1997. In our view, that supports a BoJ rate rise in December.
Oil extended its rebound as traders weighed the outlook for an end to the war in the Middle East.
Today's Macro Roadmap: New York Fed President John Williams and ECB Chief Economist Philip Lane speak at 10:30 CET, and euro-area retail sales are due at 11:00 CET. The US and Canadian jobs reports land at 14:30 CET, and the University of Michigan's sentiment index follows at 16:00 CET.
The full briefing
Stocks
S&P 500 futures were little changed, and Nasdaq 100 futures rose 0.8%, a bounce that one strategist called bargain hunting and short-covering rather than a change in sentiment (BBG). On Thursday, the Philadelphia semiconductor index fell 12%, its worst day since March 2020 (BBG), and Nvidia fell 9.3%, leaving it lower for 2026 (WSJ). The Nasdaq Composite entered correction territory and shed an estimated $2.5 trillion, the biggest drop in its history (WSJ). Every S&P 500 sector fell, after trading desks said the vote would clear the way for a rally (BBG). About 40% of pending US data-centre capacity sits in states whose new governors promised to stop or pause construction (BBG). Voters also approved or are on track to approve 46 local measures that stall development, at least 17 of them outright bans (BBG). Retail investors were on pace for their biggest day of net stock sales since the Covid-19 pandemic (WSJ). Euro Stoxx 50 futures fell 1.1%, and FTSE 100 futures fell 1.0%, following the losses in Asia.
Asian equities
South Korea's Kospi dropped as much as 8.8% and briefly fell below 5,000, triggering a trading halt (BBG). Taiwan's Taiex closed 4.5% lower and entered a bear market (BBG). Foreign investors have sold more than $45 billion of Taiwanese shares this quarter (BBG). The MSCI Asia Pacific Index fell 3.8% (BBG), Hong Kong's Hang Seng fell 1.2%, and China's CSI 300 fell 1.3%, as the selloff in chipmakers deepened. South Korea will waive for three months a rule that requires 140% collateral on margin loans (Breakingthenews), and Korea and Taiwan trimmed their AI selloff losses on hopes of official support (BBG). Taiwan's regulator is expected to announce stabilisation measures this afternoon (BBG).
Hedge funds
October brought the largest active unwinding of positions at stock-picking funds in over a decade, with their market exposure down about 9% since June, one bank's client note showed (WSJ). Value Aligned Research Advisors tumbled 33% in October, Tiger Global lost 8.5%, leaving it little changed for the year, and Whale Rock's flagship fell about 8%, trimming its 2026 gain to roughly 34% (BBG). Walleye Capital is returning some cash after its worst month since March 2020, and Kirkoswald recorded its worst-ever monthly decline (BBG). Millennium is pulling more than $1.5 billion of leveraged cash from two external funds (BBG). Samlyn Capital, a $7 billion fund, sold nearly everything except financials and is dismissing senior analysts (BBG). Funds focused on telecoms, media and technology lost more than 4% on Thursday, one bank told clients (WSJ). One bank's models show volatility-control funds could sell about $135 billion of US equity futures over the next 24 to 48 hours (BBG). Another bank's head of equities execution said its phones were being flooded with calls, while long-only investors were frozen (BBG). Hedge funds were massive sellers of AI debt, one bank strategist said (LS). In Asia, hedge-fund managers and brokers faced panicked clients (BBG).
Japan
Nominal wages rose 4.6% y/y in September, the fastest since 1997, against a 3.8% consensus and a revised 3.9% in August (Reuters). Real wages rose 2.2% y/y, above the 1.3% consensus, for a ninth straight monthly gain (Reuters). Regular pay rose 3.7% y/y, and base pay for full-time workers, a gauge that excludes bonuses, overtime and sampling distortions, rose a record 3.1% y/y (Straitstimes). Special payments jumped 32.6% y/y, which the labour ministry called a statistical quirk (Reuters). More than 80% of economists surveyed by Bloomberg expect a BoJ rate rise on 18 December (Straitstimes). In our view, the data support that call. Money markets price in only a 52% probability, down from 79% in our Day Ahead on Thursday (Ggma-app), as the equity rout weighs. Economists expect third-quarter GDP growth of an annualised 0.3%, slowing from 1.4% (Channelnewsasia). Prime Minister Sanae Takaichi said proceeds from the BoJ's faster ETF sales should fund investment in economic security, and the Government Pension Investment Fund reports quarterly results today, with investors watching for a shift in its allocation (BBG).
The central banks
The Bank of England raised rates for the first time since 2023 (Reuters). The policy rate rose 25 basis points to 4.00% on an 8-1 vote, with Catherine Mann favouring a 50-basis-point rise, and the bank projected CPI inflation at 4.9% y/y in the second quarter of 2027 (LS). Governor Andrew Bailey said a second rise is probably more likely than not if energy prices return to where they were before this week's drop (BBG). Cleveland Fed President Beth Hammack said policy will need to move to a restrictive stance, preferably through more frequent smaller adjustments (Cleveland Fed). Richmond Fed President Thomas Barkin said that on the pace of rate hikes, "gradual makes sense" (Reuters).
ECB President Christine Lagarde said data will tell if a December rate rise is needed (LS). ECB Governing Council member Ante Žigman said there is a rather big chance of a December rise (BBG). ECB Executive Board member Isabel Schnabel said consumer inflation expectations have moved away from the 2% target in response to the energy shock (ECB), and that public debt and non-bank finance could threaten monetary dominance if left unchecked (Reuters). Nominations to succeed Christine Lagarde close at 17:00 Brussels time, with Spain and the Netherlands signalling Pablo Hernandez de Cos and Klaas Knot (BBG). Bank of Canada Governor Tiff Macklem told senators that risks to inflation had increased (BoC), and the bank and the government renewed the 2% inflation target for five years (Investing). Norges Bank held its rate at 4.5% and said it is prepared to raise it if needed (Norges-bank). SNB Chairman Martin Schlegel said the conditional inflation forecast is the bank's main indicator for policy decisions (SNB). RBA Deputy Governor Andrew Hauser said trust in the bank's near-term ability to achieve its objectives has fallen materially (RBA). Banxico cut its rate by 25 basis points to a four-year low of 6.25%, a move only six of 26 economists expected (BBG). The Bank of Mexico's board voted 3-2 and called the cut a one-time adjustment (WSJ).
What's priced for central banks?
Currently, short-term interest rate (STIR) traders price in a 67% probability of a Fed rate rise in December and 17 basis points of tightening by then. For the ECB, they price in a 76% probability of a rate rise in December, for the BoJ a 52% probability and for the BoE a 49% probability. They price in a 35% probability of a BoC rate rise in December, a 60% probability of an RBNZ rise, an 8% probability of an SNB rise and a 4% probability of a further RBA rise.
Currencies
The dollar strengthened against all of its Group-of-10 peers, and the dollar index rose 0.3% to 101.86 (BBG). The euro fell 0.3% to 1.1185 dollars, the pound fell 0.3% to 1.3416 dollars, and the Canadian dollar fell 0.2% to 1.4052 per dollar. The Australian dollar fell 0.7% to 0.688 dollars as Asian stocks fell, and the yen eased 0.3% to 158.11 per dollar. The Taiwan dollar weakened past 33 per dollar for the first time since April 2025 as foreign funds sold local stocks (BBG).
Bonds
Treasuries held Thursday's gains, as the rout stoked haven demand and sent yields to their lowest since early September (BBG). The ten-year yield stood at 4.83%, and the two-year yield stood at 4.47%. Japan's ten-year yield fell 13 basis points to 2.66%, as the stock selloff deepened and traders pared expectations for a BoJ rate rise (BBG). China's ten-year yield fell to a record intraday low of 1.58% on haven demand and a recent policy-rate shift seen as easing (BBG).
Commodities
Brent rose 1.8% to $100.01 a barrel, and WTI rose 1.4% to $91.76, as traders weighed the outlook for an end to the war in the Middle East (BBG). On Thursday, Brent settled up 3.9%, and WTI settled up 2.7%, after both fell more than 8% on Wednesday (WSJ). January Brent is still down almost 12% this week (BBG). Iran is reviewing "concrete proposals" on its nuclear programme from mediators, officials told The New York Times (Nytimes). Iran wants a US naval blockade lifted, sanctions eased and frozen assets released before fully reopening the Strait of Hormuz (BBG). Middle Eastern oil exports recovered to around 20.7 million barrels a day in October from 9.8 million in March, and the market ran a surplus of 1.4 million barrels a day, one bank estimated (WSJ). Saudi Aramco cut its December Arab Light price for Asia by $2 a barrel to a $6.50 discount, the lowest since May 2020 (Zawya). China's state refiners are expected to reduce diesel exports this month because of tight inventories, according to Energy Aspects (BBG). Gold fell 0.9% to $4,050 an ounce as some investors sold it to cover equity losses, and lower prices are drawing buyers back in India ahead of the wedding season (BBG). Copper fell 1% to $13,712 a ton, its lowest since July, as the AI selloff and the fading prospect of US tariffs weighed (BBG).
Crypto
Bitcoin fell 0.1% to $75,633 after dropping to a seven-week low on Thursday, as the rout in technology shares spilled into risky assets (BBG).
US politics
Secretary of State Marco Rubio is weighing whether to leave the administration, people familiar said, while he told The New York Times that staying to the end of the term has always been his plan (BBG). Democrats plan to target President Donald Trump's tariffs on Canada first, though any measure would likely need 60 Senate votes (WSJ).
France
Around 575,000 people joined protests over the cost of living, the most on any day since the unrest began in September, and the National Assembly rejected the budget bill on a first reading (BBG).
Corporate news
Major investors doubt that Anthropic's planned IPO can reach the expected $1.5 trillion valuation, and one said it could be closer to $1 trillion (WSJ). Qualcomm fell 9.5% on Thursday after a profit forecast whose midpoint missed estimates (BBG). The cost of insuring SpaceX's debt rose to a record, and the yield on one CoreWeave bond rose above 17% (BBG). A record 112 private-debt borrowers defaulted, up 22% from the previous quarter, Kroll Bond Rating Agency said (BBG). Micron suspended plans for a memory plant in Taiwan over a labour dispute, and Microsoft opted not to extend a Texas data-centre contract with Nscale (BBG).
Research trade ideas
Bank of America and Standard Chartered say the drivers of the dollar's strength are largely intact, citing US economic resilience and expected Fed rate rises (BBG). CIBC expects a weaker dollar as the AI trade comes under stress, and Nomura is positioned for the yen to gain against the dollar (BBG).
Data and the day ahead
Data and the day ahead: On Thursday, US initial jobless claims fell to 189k from 194k, below the 196k consensus and every estimate (BBG). German factory orders rose 4.4% m/m in September, against a 4.5% consensus, and Sweden's flash CPIF inflation fell to 1.1% y/y in October from 1.5%, below the 1.4% consensus (Scb). Australia's trade surplus widened to A$2826m in September from a downwardly revised A$184m, above the A$1000m consensus. On Wednesday, the US ADP employment change was 86k, above the 67k consensus, and the ISM services index slipped to 54.5 from 54.9. Euro-area inflation rose to 4.0% y/y in October from 3.8%, in line with the consensus (LS). Employers' healthcare costs rose 6.4% y/y in the third quarter, and private wages rose 3.1% y/y, the slowest in five years, as health insurance absorbed more of the pay bill (WSJ). An independent Bloomberg price index shows motor fuel up 39.9% y/y through late October and pharmaceutical prices down 7.3% y/y (BBG).
Still to come: Euro-area retail sales are due at 11:00 CET, with consensus at -0.1% m/m from 0.1%. New York Fed President John Williams and ECB Chief Economist Philip Lane speak in Frankfurt at 10:30 CET. SNB Governing Board member Petra Tschudin speaks at 12:00 CET, and BoE Chief Economist Huw Pill speaks at 13:15 CET. The US jobs report is due at 14:30 CET, with payrolls consensus at 70k from 29k, unemployment at 4.2% and average hourly earnings at 2.9% y/y from 3.0% (our preview here). Markets will also watch revisions and the household survey (LS). Canada's jobs report lands at the same time, with consensus at 15.0k from -68.3k and unemployment at 6.5%. The University of Michigan's sentiment index is due at 16:00 CET, with consensus at 48. St. Louis Fed President Alberto Musalem speaks at 15:10 CET, Fed Governor Michelle Bowman speaks at 18:15 CET, and San Francisco Fed President Mary Daly speaks on CNBC at 19:00 CET. New Zealand holds a general election on Saturday.
Time Stamp: 6 November 2026, 07:56 CET
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Related: Our preview: US & Canada Jobs Reports and Fed Speakers · Wednesday's Briefing: Stocks and Dollar Slip as Democrats Sweep Congress · Previously on the BoJ: Tech Selloff Deepens as BoJ Says Its Inflation Target Is… (30 Oct)