The Nikkei has fallen 20% from its all-time closing high in June, increasing the likelihood that it will enter a bear market. The decline in U.S. stocks and intensified selling of AI stocks have been cited as background factors.
The Nikkei recorded a 20% decline from its June closing high of ¥72,366.34 and entered a phase in which a move into bear-market territory is anticipated. Trading has continued to fall sharply.
In the U.S. market, the risk of tighter regulation of AI data centers was reassessed following the midterm election results. The Nasdaq Composite fell 5.5% and the SOX index fell 12%, declining to levels close to those seen since March 2020. Investor sentiment toward AI stocks is deteriorating.
Ichikawa Masahiro (市川雅浩), chief market strategist at Sumitomo Mitsui DS Asset Management, said concerns over data-center regulation were strong. He said the market was sensitive to state-level regulation and indicated that the Nikkei could test lows in the ¥56,000 range.
The view that a decline of more than 20% from a high is considered the start of a bear market has been repeatedly cited in technical stock-market indicators.