Nikkei Falls Over 3% as AI Stocks Slide on US Midterm Worries

Direct answer: Japan’s Nikkei share average fell more than 3% in morning trading on November 4, 2026. AI related stocks led the fall as investors worried that gains for Democrats in the US midterm elections could mean tougher rules for data centre projects and slower spending on AI infrastructure.

What happened

Tokyo markets reopened on November 4 after a public holiday on November 3 for Culture Day. Reuters reported that the Nikkei was down 3.1% at around 61,130 by 0150 GMT, while the broader Topix index fell about 1.9% to around 3,860.

Chip and AI related shares took the hardest hit. SoftBank fell about 7%, Advantest fell 6.4%, Tokyo Electron fell 5%, and memory chip maker Kioxia fell 10%. Fibre optic cable makers Fujikura and Furukawa Electric fell 8.2% and 9%.

The selling followed early US midterm results that pointed to Democratic gains. No chamber had been called at that stage, but prediction markets were pricing in higher odds of a Democratic sweep. One Tokyo based portfolio manager told Reuters that Democratic wins in some key states had fuelled caution about stricter regulation of AI infrastructure investment.

US stock futures were also lower at the same time, as covered in our earlier post on US stock futures dipping as early midterm results came in.

Why it matters for beginners

The Nikkei is Japan’s best known stock index. It tracks 225 large companies listed in Tokyo, so a sharp fall tells you that investors in Japan turned cautious in a hurry.

AI stocks matter here because many of the companies that fell make the chips, equipment, and cables used to build data centres. If investors think rules could slow data centre building, they may sell those shares first, even before any new rule is announced.

A fall in one country’s market does not automatically mean the same thing will happen everywhere else. South Korea and India rose in early trade on the same morning, which shows that markets can move in different directions on the same news.

What to watch next

Watch whether US midterm results confirm a Democratic sweep, a split Congress, or a different outcome, and whether any party sets out clear plans for data centre rules.

Watch US stock markets when they open, to see if technology shares follow Tokyo lower or recover.

Watch the next updates from chip and AI companies, because their spending plans will show whether the data centre buildout is slowing or still growing.

FAQ

What is the Nikkei?

The Nikkei is an index of 225 large companies listed on the Tokyo Stock Exchange. It is often used as a quick guide to how Japanese stocks are doing.

Why did AI stocks fall the most?

AI stocks fell the most because the worry was specific to them. Investors were concerned that tighter rules for data centres could slow spending on the chips and equipment those centres need.

Does a Nikkei fall mean US stocks will fall too?

Not necessarily. Markets often move together on big news, but they can also split. On November 3, US stocks themselves were mixed, with the Nasdaq rising while the Dow fell.

Why was Tokyo closed on November 3?

Tokyo markets were closed on November 3 for Culture Day, a public holiday in Japan. That meant the November 4 session was the first chance for Japanese investors to react to US election night news.