Nikkei 225 falls for fourth straight day on AI chip selloff

Japan's Nikkei 225 fell for a fourth straight session on Thursday, November 5, closing 1.79% lower at 61,077, its lowest finish in five and a half months, NHK reported. The drop came even though most of the index's members rose. Heavy selling in AI and semiconductor shares outweighed those gains, as investors weighed what a Democratic-controlled Congress could mean for data center construction in the United States.www3.nhk.or.jp

The losses were concentrated in a handful of heavyweight stocks. The broader Topix climbed 1.16% on the same day, and Bloomberg suggested more pain lay ahead. December Nikkei futures on the Chicago Mercantile Exchange CME Group Inc. ↘ 0.33% were trading well below Thursday's close early on Friday, Tokyo time, after a tech rout on Wall Street.bloomberg.com+1

Chip stocks drag benchmark

Chip equipment makers Advantest and Tokyo Electron fell 14.7% and 9.4%, while 161 of the Nikkei's 225 stocks advanced and 64 declined, Reuters reported via The Star. Toyota Motor jumped 16.7% after raising its profit forecast, and Fast Retailing gained 4.7%. Lower crude oil prices also lifted the wider market. They fell after President Donald Trump said voter discontent with the Iran war had contributed to Republican losses, which raised hopes the conflict could end sooner.thestar.com.my

"Funds that had previously been flowing into AI and semiconductors have shifted to other sectors," said Wataru Akiyama, an equities strategist at Nomura Securities ↘ 2.86%. He added that there is "a growing view that the Democrats' gains will lead to delays in data-centre plans".thestar.com.my

Midterm results shake AI trade

On Wednesday, the Nikkei briefly lost more than 3,000 points, or 4.8%, as results showing Democratic gains came in. The index had climbed back to 70,000 in early October but has trended down since then.www3.nhk.or.jp

The selling grew worse in New York later on Thursday. The Nasdaq Composite closed down 5.5% and the S&P 500 ↘ 4.41% lost 4.4%, according to Yahoo Finance, which reported that chipmakers shed more than $1.5 trillion in market value. Nvidia ↘ 9.26% fell 9.2% and Advanced Micro Devices ↘ 17.26% dropped 17.3%, CBS News reported. UBS ↘ 3.75% analysts estimated that construction pauses could put about 30% of expected 2028 US data center capacity additions at risk.reuters.com+2

Some analysts doubt the slowdown will be lasting. Akiyama said that "given the strategic competition between the US and China, it is unlikely that the trend in data-centre construction will be reversed".thestar.com.my