Selling spread across AI development-related stocks in the U.S. stock market, while higher oil prices and interest-rate trends heightened anxiety across the market. The developments in the Japanese and U.S. markets and worsening funding conditions for AI stocks are also affecting the Japanese market.
U.S. stocks remained volatile from 22 October through 23 October. The Dow Jones Industrial Average ended 10/22 modestly higher before falling to a loss of approximately $652 on 10/23. Rising oil prices and tensions in the Middle East weighed on investor sentiment, while declines in AI-related stocks were a drag on the market. The Nasdaq and SOX also fell sharply, with selling in technology stocks pulling down the broader indexes.
The turmoil in U.S. markets also raised concerns about the profitability of AI investment and worsening funding conditions. Views spread that a series of IPO postponements and cancellations had changed the direction of funding liquidity. AI and semiconductor-related stocks, including Tesla, were volatile, strengthening the view that changes in interest-rate trends during the period would determine the overall direction of the stock market.
The effects also spread to the Japanese market. The Nikkei Average fell sharply on 10/22 and continued lower on 10/23. Selling was particularly evident in AI and semiconductor-related stocks against the backdrop of declines in U.S. semiconductor stocks, affecting the Nikkei Average's contribution breakdown. TOPIX and the JPX Prime 150 Index both declined. Among individual stocks, AI-related names stood out for their declines, although some buying was also seen on expectations of strong earnings.
As developments in the Japanese stock market remain in focus, geopolitical risks between the United States and China, interest-rate trends and changes in the funding environment for AI investment are expected to remain key market themes.
Market reaction to uncertainty over the outlook for AI-related stocks and worsening funding conditions will be central. Funding trends and IPO activity among AI development companies, together with developments in the oil market, may determine the market's future direction.