Asian chip stocks slide after Democratic midterm win as Nikkei falls 1.79%

Tokyo closes lower as technology shares fall

The Nikkei 225 closed down 1.79% at 61,077.90 points on Thursday, 5 November, dragged down by technology shares. Investors worried about spending on artificial intelligence and about possible tighter regulation in the United States after Democrats won the midterm elections. Chinese authorities had not approved SoftBank's $5.4 billion acquisition of ABB's robotics division, which added to the pressure on sentiment. Chip equipment makers Advantest and Tokyo Electron were among the heaviest decliners.

Toyota ran against the trend, rising 16.68% after it raised its forecast for annual earnings. The broader Topix did not follow the Nikkei lower in the same way, as sectors outside technology drew buyers.

Kospi plunges and trading is halted in Seoul

In South Korea the Kospi fell more than 5%, a drop large enough to trigger a suspension of trading. Samsung Electronics and SK Hynix, the two heavyweight chipmakers, were among the worst hit, with Samsung down 7.8% and SK Hynix down 9.6%. Qualcomm reported disappointing quarterly results, and its shares fell 7.5% in after-hours trading in the United States. Arm Holdings also lost 1.8% after the bell, as its figures failed to reassure investors.

Taiwan's benchmark index fell 1.3%, according to the Financial Times, which tied the regional sell-off to exposure to US capital spending on data centres.

Capital rotates out of AI and into other sectors

Wataru Akiyama, an equity strategist at Nomura Securities, said money that had flowed into AI and semiconductors was now moving into other sectors. He also said a view was gaining ground that Democratic election wins would delay data centre projects, so the current pace of earnings growth may not be sustainable. Of the 33 industry groups on the Tokyo Stock Exchange, 25 rose. Real estate led the gainers with a 6.5% rise, while retail gained 5.4% and Fast Retailing, the operator of Uniqlo, climbed 7.9%.

Chinese markets moved differently. The CSI 300 rose 0.4% and the Hang Seng gained 3.4%, with state-backed support helping sentiment, the Financial Times reported. Overnight the S&P 500 had closed 1.6% higher, its biggest one-day gain since early August. Nicholas Yeo, head of Chinese equities at Aberdeen, described the Asian sell-off in broader terms:

“there has been a sweeping correction triggered by what is going on in the US”

Yeo said Chinese technology stocks depend less on US capital spending than their Korean and Taiwanese counterparts.

Oil prices fall and traders weigh the US election

Brent crude slipped to just above $94 a barrel on Thursday, extending a drop from the previous day. Trump has said that the chance of attacks on Iran had become smaller, which helped push prices lower. Traders in Tokyo said some investors were betting that the Democratic sweep could restrain Trump, bring petrol prices down on a sustained basis and ease healthcare costs. The N-tv market report added that the Democratic wins could speed up efforts to end the US-Iran war, which would ease supply disruptions and inflation pressure. Lower oil prices also support the currencies of net energy importers such as Japan.

Japan's services sector still expanding

S&P Global data showed Japan's services purchasing managers' index rose to 51.7 in October from 51.3 in September, though it came in below the preliminary reading of 52.0. The composite output index slipped to 52.1 from 52.3. Readings above 50 indicate expansion, so the sector continued to grow even as equity markets sold off.

2026-0951.3

2026-10 (preliminary)52

2026-1051.7

2026-09

51.3 index points

2026-10 (preliminary)

52 index points

2026-10

51.7 index points

Data from the article text