Global Markets
Nikkei Plunges 4.7% on US Midterm Count, Then Pares Loss to 1.4%
Japanese and Korean chip-linked shares reversed sharply in Wednesday trading as early US results pointed to Democratic gains and a tougher look at AI.
HedgeWeekly News Desk ·
Japan's Nikkei 225 fell as much as 4.7% on Wednesday, touching 60,030.10 in the early afternoon, before buyers pulled it back to a close of roughly 62,188, down 1.42% from 63,081.86. South Korea's Kospi dropped about 4% to a low near 5,422 and then finished up 0.62% at about 5,684.
Reports tied the swings to the US midterm count. Early results showed Democrats performing strongly, and investors expected them to take control of Congress, which they judged would bring closer scrutiny of technology and AI. Foreign investors sold AI-linked shares across developed markets, with selling concentrated in semiconductor equipment, heavy industry and defence stocks in Tokyo.
The recovery came with a rebound in US stock futures and bargain buying by Japanese domestic investors. SoftBank closed down 3.2% at 4,269 yen and Kioxia fell 5.38% to 10,735 yen, while SK Hynix ended down just 0.36% and Samsung Electronics narrowed its loss to 1.25%. Money also moved to safer assets: COMEX gold rose 2.4%, a US Treasury yield fell to 4.91%, and crude traded between $106.20 and $108.70 a barrel. Hong Kong's Hang Seng was up 1.5% at 23,887.73 mid-afternoon after an early dip.
For funds and allocators, the day shows how crowded the AI trade has become and how quickly it can gap lower on policy risk. The reversal suggests dip-buyers remain active, but sustained gains depend on final US congressional seat counts, the pace of foreign net selling in Asia, and the performance of US semiconductor and AI shares when Wall Street opens. Japan's October manufacturing PMI also eased to 53.3 from 54.1, its slowest growth in seven months.