Following the Democrats' landslide victory in the U.S. midterm elections, the Nikkei Average plunged more than ¥3,000 at one point. Concerns about AI regulation spread, and selling prevailed in AI and semiconductor-related stocks.
As votes were counted in the U.S. midterm elections, reports said that the Democrats had secured majorities in both chambers of Congress, and the Nikkei Average fell more than ¥3,000 at one point in the Tokyo market. The decline accelerated in the afternoon, pushing the index down to nearly ¥60,000 and close to its lowest level since May.
Against the backdrop of reports of a Democratic victory, concerns spread through the market that regulation of AI could have a positive impact, raising worries about constraints on data center investment. This prompted speculation that selling in AI-related and semiconductor-related stocks had dragged the market lower.
Some market participants believe that “selling pressure following the Democrats' gains will further accelerate the downtrend in semiconductor stocks.” The move has drawn attention as an example of U.S. political developments and trends in AI and semiconductors spilling over into the Japanese market.
The market's future direction may depend on developments in AI regulation and the pace of recovery in U.S. markets, and the performance of individual stocks will also require close attention.