The decline in equities spread across Japan and the US against the backdrop of a sharp drop in technology stocks. As the outlook for expanding AI investment becomes less certain, attention is focused on US interest rates and oil prices, which will influence the direction of dollar-yen.
Technology stocks plunged across the Japanese and US markets, with the US NASDAQ Composite down 5.52% from the previous day and the SOX semiconductor index falling more than 12%. In response, the Nikkei Average also ended trading in Tokyo sharply lower, with selling spreading beyond technology stocks to the market as a whole.
The Republican defeat has been cited as the trigger for the sharp decline, heightening concerns about tighter regulations on AI and data centers. The market is watching to determine whether expectations for growth in AI investment will moderate, while also monitoring whether US interest rates will continue to decline.
Some view the impact on the real economy as limited if major companies continue their investment activity despite falling share prices. However, higher funding costs and construction delays could spill over into surrounding industries. How the outlook for AI investment will affect the US economy and interest rates has become the focus.
The outlook for dollar-yen is complex in a situation where demand for dollar cash and the unwinding of yen carry trades occur simultaneously. Key points ahead include whether further declines in US interest rates will narrow the US-Japan interest-rate differential and how movements in oil prices will affect the inflation outlook.