US stocks at times rebounded following the US midterm election results, while concerns over AI investment resurfaced. Doubts remain over the effectiveness of the Chinese authorities' market-support measures, and volatility in AI-related stocks emerged in Japanese stocks following the Democrats' landslide victory.
US equities staged a sharp rebound on 4 November. Expectations grew that the Democratic Party would control both houses of Congress in the midterm elections, and the NY Dow rose sharply at times, but selling emerged in AI-related stocks and weighed on the market. A sharp drop in crude oil prices and movements in long-term interest rates also had an impact, with investor sentiment alternating between periods of further improvement and instability.
In Chinese equities, the authorities introduced measures to support the market, but many observers said their effectiveness would be limited. The Shanghai Composite alternated between rebounds and declines, financial stocks remained weak, and developments in AI-related stocks became the market's focus. Coordinated measures by the central bank and the China Securities Regulatory Commission, as well as a temporary suspension of IPOs, were reported.
Japanese stocks traded as investors sought to dispel uncertainty following the US midterm election results, while developments in AI- and semiconductor-related stocks influenced the Nikkei 225. Kioxia's sharp decline weighed on the market on 2 November, and the Nikkei 225 fell sharply on 4 November, although buying to cover positions was subsequently seen.
Concerns over excessive AI investment affected stock selection in the Japanese market, together with the outlook for US data-center and semiconductor demand. In response to US stock-market movements and Chinese policy developments, AI- and semiconductor-related stocks continued to make a significant contribution to the Japanese market.