Wall Street was slammed overnight, with the major US indices suffering one of their ugliest sessions of the year as investors rushed to cut exposure to technology and broader risk assets. Volumes rose sharply, suggesting initiative selling, while implied volatility indices spiked, underscoring just how aggressive the move became by the close. Nasdaq 100 futures led the decline, but the sell-off was broad enough to drag the S&P 500 and Dow Jones sharply lower as well.
The move had all the hallmarks of a genuine risk-off session. The VIX surged, while Nasdaq volatility jumped to its highest level since April 2025 as Nasdaq 100 futures fell to a six-month low. Dow Jones futures fell 'only' 3.9%, but an elongated bearish engulfing candle could tempt bears back into the market.
Source: CME, CBOC, tradingView
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US Midterms and AI Concerns Fuel the Sell-Off
While Wall Street had initially taken the US midterm results in its stride, sentiment deteriorated rapidly as investors reassessed the implications for AI, data centre expansion and the broader technology trade. Elevated valuations, concerns over returns on AI-related capex and renewed regulatory uncertainty combined to create a potent mix for a sharp unwind.
The question now is whether this was a single-day event that will be met with cautious trading, or the beginning of something much larger for Wall Street. With support levels nearby, I lean towards the former for now. But that doesn’t mean the ASX or Nikkei are in for an easy session.
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Semiconductor Stocks Bear the Brunt of Nasdaq Sell-Off
Semiconductor stocks led the rout, with Micron and AMD plunging over 17%, while Arm, Broadcom and Nvidia also suffered double-digit or near-double-digit losses. The Nasdaq 100 fell 6.36%, although selling was less severe across the major tech giants, with Microsoft, Meta, Alphabet and Amazon posting relatively modest declines.
The damage was already building ahead of Thursday's sell-off. CoreWeave and Nebius were down over 20% across five sessions, while Micron and Arm had shed nearly 19%. Interestingly, CoreWeave bucked Thursday's trend with a 9.83% gain, suggesting some bargain hunters were already emerging despite the broader rout.
Nikkei Futures Plunge 9% as 60,000 Support Gives Way
As one might expect, Nikkei futures wasted no time following the Nasdaq's plunge, falling over 9% to trade below 58,000. The selloff has seen prices slice through the 200-day moving averages and the 60,000 support zone, accompanied by a sharp increase in trading volume that suggests bears are firmly in control.
Potential support sits at 55,950, a break beneath which could bring 54,000 into focus, followed by the weekly VPOC at 53,200.
However, history shows that particularly volatile bearish sessions can be followed by sharp countertrend rallies. That makes chasing shorts around current lows potentially risky, particularly ahead of the weekend. Despite the bearish momentum, bears may prefer to remain nimble rather than assume the selloff will continue uninterrupted.
A rebound towards 60,000 could provide bears with an opportunity to reassess short positions at a more favourable level. Conversely, should momentum turn higher, 60,000 becomes a logical upside target for bulls, particularly if short covering gathers pace ahead of the weekend.
Source: CME, TradingView
ASX 200 Outlook: Options Resistance Holds Despite Wall Street Rout
Despite the sharp sell-off on Wall Street, SPI 200 futures have held up relatively well, suggesting the ASX could avoid a more aggressive decline today. However, futures have rejected resistance around 9050–9075, while the ASX 200 has retreated towards 9000 following a strong rally. With risk sentiment firmly negative, my bias is for a choppy session with a slight bearish tilt rather than an outright sell-off.
Options positioning highlights 9050–9075 as an important resistance zone, with a put wall at 9050 and a major ceiling at 9075. A sustained break below 9000 would expose minor support at 8975 and the gamma floor at 8950, followed by 8925. However, bulls could regain confidence if 9000 holds and prices reclaim 9050, potentially opening the door for another test of 9075.
With SPI futures open interest rising alongside the recent rally, there is still evidence of participation from futures traders, although today's rejection warrants caution.
Source: ASX24, Forex.com, TradingView
