Markets
Nikkei Fell 3.6% as the US Vote Hit Japan's AI Stocks
Japan's Nikkei 225 fell 3.56% to 60,835.36 by Wednesday's midday break, its lowest since July 29, as US midterm results hit AI and chip stocks. Kioxia fell about 10%.
Tokyo was the first big stock market to trade a full session on the US midterm results, and it sold what it owns most of: the companies that supply the AI build-out. The Nikkei 225 was down 3.1% at 61,127.9 by 0150 GMT on Wednesday, November 4, and down 3.56% at 60,835.36 by the midday break, its lowest level since July 29. The broader Topix fell much less, about 1.85% in the early trade, a gap that shows where the selling was concentrated.
The losses read like a list of the AI supply chain. Advantest, which tests AI chips, fell 6.4% in early trading and Tokyo Electron 5%; SoftBank Group, the most leveraged listed bet on OpenAI and data centres, lost about 7% early and around 8% to 9% later. Kioxia, the flash-memory maker, fell more than 10%, also hit by a forecast for the October-December quarter that missed expectations, and the cable makers Fujikura and Furukawa Electric, whose fibre goes into data centres, fell 8.2% and 9%. Of the 225 stocks in the index, 130 fell and 95 rose.
The trigger was the projection overnight that Democrats would win both chambers of Congress. Investors worried that it could bring stricter rules for data-centre projects and slow AI infrastructure spending, Reuters reported. "Democrats are winning seats in some key states," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management, explaining the caution. In US trading overnight, Nasdaq-100 futures had been down as much as 2.2% before recovering part of the loss.
The timing made the fall look worse. On Tuesday the Philadelphia Semiconductor Index had rebounded 2.6% in New York, and AMD, Arista and Supermicro all reported after the close with forecasts above expectations, the kind of news that would usually lift Tokyo's chip names. Instead, the election outweighed the earnings: the market priced a risk to the next two years of spending more heavily than a strong report on the last three months. The Nikkei had also risen far, which leaves more room for profit-taking when the story changes.
Two things will decide whether Wednesday is a reset or the start of a deeper correction. The first is how Wall Street trades the same news in its own session, since Tokyo partly front-ran it. The second is whether any of the proposals that worried investors can actually pass: a new Congress takes office in January, the White House keeps its veto, and many of the rules on data centres, from power to zoning, are set by states rather than Washington.