Nikkei Enters Bear Market as Wall Street’s AI Rout Spreads to Tokyo
Japan’s Nikkei 225 entered a bear market on Friday, closing more than 20% below its record high as the rout in US technology shares swept across Asia and wiped out months of gains in Tokyo.
The index closed at 57,434.77, down 3,643.13 points, or 5.96%, AJU Press reported, its lowest finish since 13 April. It was the third-largest points drop in the Nikkei’s history, behind only the sell-off of 5 August 2024, and the fifth consecutive daily fall. Over those five sessions the index has shed 7,224.70 points, or 11.17%.
Measured against its all-time closing high of 72,366, reached on 25 June, the Nikkei is now down 20.6% — past the threshold investors conventionally use to define a bear market.
Five sessions of selling
At one point during Friday’s session the index fell by more than 4,300 points and slipped below 56,000 before recovering some ground into the close. The broader Topix index fell 5.90% to 3,707.99, with 98% of the stocks on the Tokyo Stock Exchange’s prime market ending lower.
The selling was led by the same artificial intelligence names that powered the rally. SoftBank Group declined around 11% to its lowest level in more than a year, Invezz reported, while chip-related stocks were hit hard: Kioxia Holdings dropped 8.72% and Ibiden fell 8.61%, hitting its daily limit for a second consecutive day. Fujikura, which makes optical fibre for data centres, plunged by nearly 20% during trading, wiping out all of its gains since the start of the year.
The rout spread beyond technology. Toyota, which had surged 16.68% the previous day, fell 5.52%, and Fast Retailing, the parent company of Uniqlo, dropped 3.79%.
The trigger came from Wall Street
The immediate cause was the collapse in US technology shares on Thursday. The Nasdaq fell 5.5% on Thursday, its worst day since April 2025, while the Philadelphia Semiconductor Index plunged 12.24%. Nvidia alone lost more than $440 billion in market value in a single session.
Investors are braced for tighter regulation of artificial intelligence after the Democrats’ sweeping victories in Tuesday’s midterm elections handed the party control of both chambers of Congress. The fear is that greater scrutiny of data-centre construction could slow investment in the AI infrastructure that has driven the market’s gains.
Seoul halts trading as Asia falls
The selling spread across the region. In South Korea, the Kospi fell more than 8% in morning trading and triggered a Level 1 circuit breaker that halted trading for 20 minutes, the eleventh such halt of the year. The government convened an emergency meeting before support buying helped the index recover; it closed down 6.02% at 5,059.69. Samsung Electronics finished 6.35% lower and SK Hynix fell 10.44%.
Taiwan’s Taiex ended 4.5% lower, its largest daily fall since July, with TSMC down 4.7%. Hong Kong’s Hang Seng Tech Index fell 1.8% and Singapore’s Straits Times Index lost 2.9%.
What investors are watching next
Strategists cautioned against assuming the worst. Shane Oliver, chief economist at AMP, told Reuters it was too early to identify a bottom but described the retreat as potentially “more of a correction than a bear market” if underlying economic conditions remained sound.
Attention now turns to Wall Street’s Friday session. The October jobs report showed the US economy added 165,000 jobs last month, with unemployment falling to 4.1%, a stronger result than economists had expected — and jobless claims had already fallen to their lowest level since 1969. Whether that resilience steadies US technology shares will set the tone for Tokyo when trading resumes on Monday.
The Nikkei’s price-weighted construction makes it especially sensitive to sharp moves in its most expensive constituents, so a handful of heavyweights falling by double digits can drag the whole index down. For now, the market that spent the summer setting records has given back a fifth of its value in four and a half months — and investors are waiting to see where the floor is.
