Nikkei falls 3.6% to 60,835.36 as investors await US election results

Key Facts

The Nikkei 225 fell 3.6% to 60,835.36 on November 4, its lowest level since early May, according to the Associated Press. The decline came as appetite for technology and artificial intelligence stocks faded, while investors followed the results of the US midterm elections. S&P 500 futures fell 0.8%, while Nasdaq futures dropped 1.8%, according to Reuters via MarketScreener. The moves coincided with early results showing gains for Democrats, while control of the Senate remained undecided. The pressure spread to chip and memory companies in Asia, putting their shares among the session's most closely watched moves.

In Japan, shares of SoftBank Group, an investor in OpenAI, fell 8%, while Kioxia Holdings dropped 10.8%, according to the Associated Press. The agency said Kioxia's losses extended after the company's guidance for October to December came in below market expectations. The moves in the two stocks illustrated the pressure on companies linked to the technology sector, alongside investor concerns about elevated valuations for artificial intelligence stocks. The report said these shares had faced intermittent selling waves amid concerns that their prices had risen more than expectations justified. Those concerns overlapped with political uncertainty, and were not the only factor behind the session's weakness.

In South Korea, the Kospi lost 3.2% to 5,466.83, with SK Hynix shares falling 3.2% and Samsung Electronics shares declining 1.8%, according to the Associated Press. Taiwan's Taiex fell 2.3% in the same session. In Hong Kong, the Hang Seng Index slipped 0.2% to 23,489.88, while the Shanghai Composite declined 0.1% to 3,603.83. Australia's S&P/ASX 200 lost 0.8% to 8,812.10 after the central bank raised interest rates on Tuesday. The index moves showed varying losses across Asian markets, with memory stocks in Japan and South Korea among the biggest moves cited in the report.

US stocks had a mixed performance in Tuesday's session, November 3, with the S&P 500 rising 0.4% and the Nasdaq gaining 0.8%, while the Dow Jones fell 197 points, or 0.4%, according to the Associated Press. Apple shares fell 1.9% despite the company reporting quarterly earnings and revenue above analysts' expectations. The company said it expected to keep less of each dollar of revenue in the final three months of the year because of higher memory-chip costs. The yield on the 10-year US Treasury rose in the previous session to 4.96% from 4.91%, after a jobs report showed more job openings at the end of September than economists had expected. In early trading on November 4, the same yield fell 6 basis points to 4.906%, according to Reuters via MarketScreener.

Charu Chanana, an analyst at Saxo, linked the market moves to bets on a stronger-than-expected election outcome for Democrats, saying markets may be pricing in that possibility in a way that lowers expectations for additional fiscal stimulus. An earlier Reuters report had said investors were watching the possibility of tighter regulatory scrutiny of artificial intelligence, alongside debt-ceiling and budget negotiations. The report said the debt ceiling issue was expected to return to the forefront in 2027. It also noted that the S&P 500 had risen about 27% since Donald Trump returned to the White House in 2025, with Republicans controlling Congress. The reports thus linked the election to fiscal and regulatory policy expectations, as concerns about artificial intelligence stock valuations weighed on the sector.

Historical precedents cited in a Reuters report via KTWB offer a broader perspective, but cover cycles and periods different from the Asian session on November 4. According to Ned Davis Research, since 1930 there have been eight midterm election cycles in which the president's party lost control of the House of Representatives. The S&P 500 rose for the rest of the year in five of those cycles, with median gains averaging 1.4% from Election Day through year-end. In another historical analysis, Edward Jones analyst Brooke Vimmer said the index had posted a positive return every time in the six months following midterm elections since 1970. These figures describe past performance over specified time horizons, while the current session's moves centered on election news and technology-sector risks.

After the election, investors' attention turns to upcoming US data releases; minutes of the Federal Open Market Committee meeting were scheduled for November 18, and the Beige Book for November 25, according to the Federal Reserve calendar. The debt ceiling also remained among the political issues mentioned in the Reuters report, with expectations that it would return to the forefront in 2027. In the nearer term, control of the Senate remained undecided in the election update that accompanied the fall in futures. This meant markets were following the vote count while assessing its potential effect on fiscal and regulatory expectations. Concerns about artificial intelligence stock valuations remained in the background of the Asian declines, according to the Associated Press.