Nikkei Enters Bear Market as Trump Blames Democrats for AI Stock Rout

The index was down 6.2% at 57,320.01 at 01:50 GMT, against a record of 72,831.73 set on June 22. It had dropped 5.5% within 18 minutes of the opening bell, before many of the biggest chip and AI names had started trading, and the broader Topix was down 4.9% at that point.

The losses matter because Asia's largest markets have been carried for much of the past two years by the US data centre build-out, through suppliers of memory, chipmaking equipment and AI investment. Investors are now pricing the risk that a new political balance in Washington, and a wave of local opposition to data centres, slows that spending.

SoftBank Group lost about 11%, and memory maker Kioxia fell by roughly 10%. Advantest, the chip-testing equipment maker that dropped 15% on Thursday, was down between 9% and 12% in morning trading depending on the time of the report, and Tokyo Electron fell more than 7%.

The damage reached credit markets too. SoftBank led declines in Asian dollar bonds on Friday, Bloomberg reported, and hedge fund managers and brokers in the region woke to panicked clients after the overnight fall in US equities revived fears that the unwinding of AI bets had further to run.

Wall Street's Worst Day Since April 2025

President Donald Trump put the blame on the opposition. In a Truth Social post after US markets closed on Thursday, he wrote: "The Stock Market suffered one of the Worst Days in History based on the results of the Election." He tied the drop to the Democratic Party's gains in Tuesday's midterms.

The Nasdaq Composite fell 5.5% on Thursday, its worst session since April 2025, leaving it more than 10% below its recent high and in correction territory. The S&P 500 lost 4.4% and the Dow Jones Industrial Average dropped more than 1,800 points, or 3.4%. The Philadelphia Semiconductor Index fell more than 12% at one stage, its steepest intraday decline since March 2020. Micron and AMD each lost 17%, CoreWeave slid 10% and Nvidia dropped 9%, while the Magnificent Seven shed more than $1 trillion in combined market value.

Analysts linked the selling to concern that Democrats, once they take control of Congress, will move against the data centre boom. Several midterm winners have pledged to curb data centre expansion, and Senator Bernie Sanders has called for a national moratorium on new construction. Rising borrowing costs and stretched valuations added to the pressure. Michael Hewson of MCH Market Insights pointed to the possibility of political action in Texas against Elon Musk's companies after the state's election results.

From Seoul to Taipei

South Korea's Kospi was down nearly 9% at one point after a circuit breaker halted trading for 20 minutes, and stood 6.1% lower at 5,055.15 around 02:00 GMT. SK Hynix fell 10% and Samsung Electronics 8%. The index more than doubled between late December and its mid-June record but has since lost almost half its value.

In Taiwan, reports put TSMC's fall at between 7% and 9.6%, and the Taiex was down about 8%. Losses were smaller in markets less exposed to AI hardware: Hong Kong's Hang Seng fell 1.5%, the Shanghai Composite 1.3% and Australia's S&P/ASX 200 0.9%.

Not everyone sees only downside. Macquarie Group's outgoing chief executive said the backlash against data centres seen in the US elections could open the door for Australia to supply more computing capacity, according to Bloomberg.

US futures pointed to a mixed start in New York on Friday. Nasdaq 100 futures were up 1% in early Asian hours, while Dow futures were down 467 points.