Tokyo stocks fell across the board on 6 November following declines in US markets, with the Nikkei Average dropping more than ¥4,300 at one point and breaking below ¥60,000. As concern over tighter AI regulation spread, investors became increasingly risk-averse.
In Tokyo trading on 11 November, funds rapidly flowed out of semiconductor-related stocks from the morning onward, and the Nikkei Average fell more than ¥4,300 at one point, breaking below the psychologically important ¥60,000 level. The index closed at ¥57,434.77, down ¥3,643.13, recording an unprecedented decline.
The backdrop was concern over tighter AI regulation. As Democrats expanded their number of seats in the US midterm elections, expectations grew that regulations on AI development and data-centre construction would be tightened. There were concerns that demand for capital investment, which had driven the market to date, would slow sharply.
In New York, the Dow Jones Industrial Average fell ¥1,833 from the previous day in a steep decline, with all 30 constituents falling, while the technology-heavy Nasdaq also dropped sharply. The simultaneous sell-off spread to Tokyo, where semiconductor-related stocks exerted strong downward pressure on the broader market.
There have been cases of tighter regulation of US data centres affecting local elections, and a Democratic candidate who campaigned on a temporary halt to new construction won the Texas gubernatorial election. These developments have increased uncertainty over capital investment and raised concerns about their impact on Japanese companies.