Japan’s Nikkei 225 fell as much as 7.1% to 56,745.81, breaking below the 60,000 level and entering a technical bear market, down 20% from its June peak. The selloff was driven by investor unwinding of AI-related trades, following a post-election drop on Wall Street amid speculation of potential Democratic regulation on the artificial intelligence industry. The broader Topix index declined 6.4%, the most since April 2025.
Cable maker Furukawa Electric Co. and semiconductor firm Rohm Co. each slid over 10%. The turmoil spread across Asia, with South Korea’s Kospi plunging 8.8% and Taiwan’s Taiex also on course for a bear market. Jumpei Tanaka of Pictet Asset Management Japan described the market as exhibiting “panic selling,” questioning whether the AI rally is ending or pausing.
Kioxia Holdings Corp., once Japan’s most valuable company, has dropped more than 70% from its record high. Investors shifted toward safer assets: Japan’s 5-year bond yield fell 10.5 basis points to 2.085%, and the yen strengthened past 158 per dollar. Kazuki Sawamura of Shinkin Asset Management noted AI semiconductor stocks have become too volatile to invest in, suggesting capital may flow to other sectors as US economic fundamentals remain solid.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing