US stocks plunged against the backdrop of the US midterm election results, sending Japanese stocks sharply lower as well. The performance of AI-related stocks and concerns over data-center regulation are the market's focus.
In the US market on 11/5, the Dow Jones Industrial Average fell approximately 3.4% from the previous day, with a broad range of stocks, led by AI-related names, declining. Following the midterm election results, concerns about delays in data-center construction intensified, and the decline in the SOX Index was also pronounced. On 11/6, the market remained weak despite the upcoming release of the employment report, while the Nasdaq moved without finding a catalyst for a rebound.
Meanwhile, nonfarm payrolls in the US employment report rose by +165,000, exceeding market expectations, and the unemployment rate improved to 4.1%. Wage growth also appeared to exceed expectations, prompting wider views that expectations for additional rate hikes by the FRB would strengthen. While caution remained over the market outlook, the possibility of a rebound depending on the data also remained.
In Chinese markets, uncertainty over US political developments supported sentiment, but declines in AI and semiconductor stocks weighed on the indexes. The Shanghai Composite edged higher on 11/5 and fell back on 11/6. Defensive stocks, including banks, real estate and power companies, attracted buying, while the impact of lower crude oil prices also spread across the broader market.
Japanese markets plunged in response to developments in the US. The Nikkei 225 fell ¥1,110 on 11/5 and ¥3,643 on 11/6, dropping below ¥58,000. Declines in AI- and semiconductor-related stocks made a major contribution, and the Nikkei 225 recorded one of its 3 largest declines in history. TOPIX and the JPX Prime 150 fell sharply, while signs of bargain hunting were also observed in some areas.
Among company developments, Toyota confirmed that operating profit for the September interim period increased from the same period a year earlier, while there were also reports that JT's Russian business had been transferred to temporary management. These developments could have a direct impact on share-price movements.