Portfolioflash: AI crash after blue wave
AI stocks have come under severe pressure following the blue wave. Is this a lasting correction or merely a temporary consolidation phase?
- Sharp tech sell-off after the US elections, driven by AI concerns but without a break in the fundamental picture.
- Historically, daily declines of more than 4% have been followed by strong recoveries; Q3 corporate earnings (+50% YoY in the S&P) and a broad earnings base support our constructive view.
- We had already tactically reduced risk (equities/silver) at the end of October and built up US Treasuries as a "bodyguard" but remain fundamentally positive through to year-end.
What happened?
On Thursday, US equity markets saw one of the steepest one-day losses since 1965: the S&P 500 fell by 4.4%, the Nasdaq by as much as 6.5%, and semiconductor stocks lost around 12%. The trigger was not a single event, but a confluence of several concerns at the same time. Equities in the fields of artificial intelligence (AI) and data centres came under particular pressure. Many investors fear that tighter future regulation of AI and potential delays in data-centre investment could slow the strong growth in this sector. In addition, market structure amplified the sell-off: large investors and hedge funds rapidly unwound AI-heavy positions and other previously very popular trades. In our view, the market fell more sharply than the fundamental data alone would suggest.
|
Market |
Price Change |
Price Change |
|---|---|---|---|
| Energy | Oil (Brent) |
2.0% |
64.3% |
Natural Gas (TTF) |
27.9% |
228.7% |
|
| Metals | Gold |
-2.6% |
-6.3% |
| Currencies | USDCHF |
-2.1% |
3.0% |
USDEUR |
1.4% |
4.9% |
|
| Equities | MSCI EM Future |
-12.3% |
6.3% |
USA Future |
-12.4% |
5.7% |
|
Nasdaq Future |
-4.3% |
7.1% |
|
US Semiconductor |
-30.4% |
31.4% |
|
Europe Future |
-2.0% |
5.6% |
|
Switzerland Future |
8.2% |
13.5% |
|
| Interest rates | US 10 Year |
-45.2 Bps. |
+66.6 Bps. |
EUR 10 Year |
-34.5 Bps. |
+38.6 Bps. |
|
| Volatility | VIX |
+11.8 Punkte |
+13.2 Punkte |
Source: Bloomberg, Zürcher Kantonalbank, 06.11.2026 | 08:30
How do we assess the situation?
We view the recent correction more as a short-term cleansing phase than a fundamental trend reversal. The fundamentals remain strong: corporate earnings in the S&P 500 rose by around 50% year-on-year in the third quarter, and earnings growth is increasingly spread across more sectors and regions. A marked increase in earnings is also still expected for 2027, while overall corporate leverage remains moderate.
We regard political risks – such as a nationwide stop order on new data centres – as overstated in the short term, not least because many projects are contractually secured over the long term. Uncertainties in the Middle East are indeed pushing up energy prices and fuelling nervousness, but in our view they do not, for now, change the overall robust picture of global growth.
Given the already substantial price losses in semiconductors, lower valuations and a clearly higher VIX, we expect a recovery in the medium term. However, for larger additional purchases we are still waiting for clearer buy signals from our technical and sentiment indicators.
Market reaction after US midterm elections
The chart shows how equity and bond markets typically perform after US midterm elections ("midterms"). Historically, these phases have tended to be broadly positive, as political uncertainty recedes and markets refocus on fundamentals. However, they are usually preceded by a phase of reorientation and higher volatility after the elections.
Performance of equity and bond markets after US midterm elections
How is our investment tactic performing?
The portfolio’s absolute return remains solid, supported by the strong performance of Swiss equities. Versus the benchmark, however, performance has suffered, mainly due to our overweight in technology and emerging markets. Our tactical reduction of risk at the end of October, by trimming equity and silver positions, has cushioned some of the recent losses. In addition, our hedging concept using longer-dated foreign bonds ("long duration") has proved effective.
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