‘AI shock’ hits Japanese stocks; Nikkei plunges more than 6%

【Financial News Tokyo correspondent Seo Hye-jin】Japan’s Nikkei 225 Stock Average (Nikkei 225) is plunging more than 6% on the 6th amid U.S.-driven anxiety over investment in artificial intelligence (AI). Its intraday decline has exceeded 4,100 points, pushing it below the 57,000 mark. As investors cut their exposure to riskier assets, Japanese government bond prices have surged and the yen has strengthened.

As of 10:14 a.m. today on the Tokyo Stock Exchange (TSE), the Nikkei 225 was at 57,161.23, down 3,916.67 points (6.41%) from the previous trading day. Its intraday loss exceeded 4,100 points, taking it below 57,000 for the first time in about seven months, since April 13.
Selling spread across the broader market, beyond AI and semiconductor stocks. The TOPIX index also fell more than 5% intraday.
On the TSE’s Prime Market, about 1,500 stocks—roughly 97% of the total—were lower today. Tokyo Electron and Advantest each fell more than 10% intraday, while SoftBank Group also posted a steep decline. Some stocks, including Sony Group Corporation, Daikin and Kao, rose.
The shock originated in U.S. markets. On the 5th (local time), the Nasdaq Composite fell 5.52% and the PHLX Semiconductor Sector (SOX) plunged 12.2%. The Dow Jones Industrial Average also dropped more than 1,800 points. AMD and Micron each fell 17%, while Nvidia was down 9%.
Investor sentiment was weighed down by concerns that a sweeping Democratic victory in the U.S. midterm elections could lead to tighter regulations on data center construction. If expansion of data centers is curbed, demand for related components, including AI chips and memory, could also fall short of expectations.
Donald Selkin, chief market strategist at Newbridge Securities, said, “The market is weighing the possibility that data center construction will not increase as much as previously expected.” Despite the sharp drop, bargain-hunting in AI and semiconductor stocks has been limited.
Markets are also seeing speculation that Anthropic’s IPO, expected at the end of this month, could be postponed.

Stock-market jitters spilled over into bond and foreign-exchange markets. Buying flowed into government bonds, considered relatively safe assets, sending Japanese long-term yields sharply lower.
This morning, the yield on newly issued 10-year Japanese government bonds, a benchmark for long-term rates, briefly stood at 2.665%, down 0.105 percentage points from the previous day. That was its lowest level in about four months, since June 30. Bond yields and prices move in opposite directions. U.S. long-term yields also fell to as low as 4.81%, supporting demand for Japanese government bonds.
The yen also strengthened against the dollar. As of 10:09 a.m., the dollar was trading at 157.81–157.83 yen, down 0.37 yen (0.23%) from the previous trading day. A fall in the dollar-yen exchange rate means the yen has strengthened. At one point today, the rate fell to around 157.27 yen per dollar, putting the yen at its strongest in a week, since the 30th of last month.
The fall in Japanese share prices also contributed to the yen’s strength by prompting overseas investors to unwind yen-selling and dollar-buying positions they had built up to hedge currency risk. As gains on their stock holdings shrank, they also reduced the size of their currency hedges accordingly.
The weakening outlook for an early rate hike amid the sharp fall in U.S. stocks also lifted the yen. According to the CME FedWatch Tool, as of early this morning, the probability of a rate hike at the Federal Open Market Committee’s (FOMC) December meeting stood at about 70%, roughly 13 percentage points lower than the previous day.
The yen also strengthened against the euro. As of 8:30 a.m., the euro was trading at 176.63–176.66 yen, down 1.20 yen from 5 p.m. the previous day.
[email protected] Seo Hye-jin Reporter