Solid Gold Berjangka – The Nikkei 225 index plummeted 5.96% to close at 57,435 on Friday. This decline pushed the index to its lowest level since April, bringing its weekly loss to over 9%—the worst weekly performance since the massive sell-off in March 2020.
The primary pressure stemmed from tech stocks, as the Democratic Party’s significant gains in the U.S. midterm elections fueled concerns over stricter regulations for the artificial intelligence industry. The market is also anxious about a potential slowdown in data center expansion, which has been a key driver of demand for technology in the sector.
Several AI-related stocks saw sharp declines throughout the week: Kioxia Holdings fell 36.8%, Taiyo Yuden dropped 22%, SoftBank Group weakened by 20.8%, Advantest lost 19.6%, and Tokyo Electron slid 13.2%.
Market sentiment was further dampened by the fact that Japanese tech companies have significant exposure to global AI infrastructure development. Fears regarding a potential reduction in data center investment prompted investors to aggressively sell off semiconductor and technology-related stocks.
Meanwhile, data indicates that nominal wages in Japan have risen at their fastest pace in nearly three decades. This has strengthened expectations that the Bank of Japan could raise interest rates again in December, adding further pressure on the Japanese stock market. (srh)