Nikkei Posts Biggest Weekly Drop Since March 2020

The Nikkei 225 Index plunged 5.96% to close at 57,435 on Friday, sinking to its lowest levels since April and pushing weekly losses beyond 9%. This represented its worst weekly performance since the Covid-driven market selloff in March 2020. Technology stocks spearheaded the decline after a sweeping Democratic victory in the US midterm elections sparked concerns about stricter AI industry regulations and a potential slowdown in data center expansion. Japanese AI-related stocks recorded significant weekly losses due to their substantial exposure to the global AI infrastructure buildout, with Kioxia Holdings falling 36.8%, Advantest dropping 19.6%, Taiyo Yuden declining 22%, Tokyo Electron losing 13.2%, and SoftBank Group sliding 20.8%. Meanwhile, data revealed that nominal wages in Japan rose at their fastest pace in nearly three decades, strengthening expectations of another Bank of Japan interest rate hike in December.