Tokyo’s Nikkei 225 suffered its third-largest point fall on record on Friday, closing down 3,643.13 points, or 5.96 per cent, at 57,434.77. It was the benchmark’s lowest close since 13 April and its first finish below 60,000 in about six months. At its worst during the session, the index was down more than 4,300 points, an intraday slide of over 7 per cent to 56,745.81.
The fall pushed the Nikkei more than 20 per cent below its all-time high of 72,366, reached on 25 June — past the threshold investors conventionally use to define a bear market. It was the index’s fifth consecutive daily decline, taking its losses over those five sessions to 7,224.70 points, or 11.17 per cent. The broader Topix fell 5.90 per cent to 3,707.99, with 98 per cent of stocks on the Tokyo Stock Exchange’s Prime Market ending lower and only three of the Nikkei’s 225 members managing a gain.
Selling was concentrated in the companies supplying the artificial intelligence build-out. SoftBank Group fell 10.83 per cent to its lowest in more than a year, while memory-chip maker Kioxia dropped 8.72 per cent and chip-testing firm Advantest and Tokyo Electron each fell by more than 10 per cent at one point during the day. Fujikura, which makes optical fibre for data centres, plunged by nearly a fifth in trading, wiping out all of its gains for the year. The rout spread beyond technology: Toyota, which had surged 16.68 per cent the previous day, fell 5.52 per cent, and Fast Retailing, the owner of Uniqlo, dropped 3.79 per cent.
The immediate trigger was Thursday’s rout on Wall Street, where the Nasdaq Composite fell 5.5 per cent and the Philadelphia Semiconductor Index plunged 12.24 per cent, its steepest fall since March 2020. Investors are increasingly questioning whether the vast sums being poured into AI infrastructure will generate returns to justify stretched technology valuations. Fears that the Democratic sweep in the US midterm elections could bring tighter regulation of data centres — including possible construction pauses in states such as Texas and Ohio — added to the pressure, as did doubts over whether Anthropic, the AI company expected to list later this month, will hold its investor presentation next week.
Prime Minister Sanae Takaichi told a parliamentary committee on Friday that the government was watching the markets but would not comment on prices, which she said were set by the market. The sell-off also dented expectations of a Bank of Japan rate rise in December, with the implied probability falling as low as 52 per cent during the morning. Some strategists, however, called the fall an overreaction, pointing to positive quarterly results from major Japanese companies.
There were early signs of stabilisation: US stocks rebounded on Friday, with the Nasdaq recovering some of Thursday’s losses, and Nikkei futures rose in overnight trading, with the December contract on the Osaka Exchange ending the night session up 840 points. Whether Friday marks a bottom for Tokyo, or only a pause in the selling, remains an open question.
Sources: Reuters — “Japan’s Nikkei slumps more than 5% as market rout deepens on AI worries”; Kyodo News — “Tokyo stocks plunge, Nikkei ends 3,643 yen lower”; Associated Press — “Japan’s Nikkei plunges 5.7%, South Korea’s Kospi falls 7.4% amid AI stock rout” (https://www.thehindubusinessline.com/markets/stock-markets/japans-nikkei-plunges-57-south-koreas-kospi-falls-74-amid-ai-stock-rout/article71672730.ece/amp/); Aju Press — “Nikkei Average Falls Below 60,000, Marking Lowest Point in Seven Months” (https://www.ajupress.com/view/20261106163670144).
