【Nikkei Average falls for 4th consecutive day】To a low of about 5.5 months (61,000 yen range)! While high-tech stocks sell off sharply due to the plunge in the US SOX index …
In the Tokyo stock market on the 5th, the Nikkei Stock Average fell for the 4th consecutive trading day. The closing price was 1,110.73 yen (1.79%) lower at 61,077.90 yen, and as a closing price, it was pushed down to the lowest level in about 5.5 months since May 20th (59,804.41 yen), ending today’s trading.
In the morning, the market followed the lead of the previous day’s sharp rebound in the US Dow Jones Industrial Average, with buying by investors with increased risk tolerance taking the lead. Furthermore, US President Trump’s statement that he would “accept” the results of the US midterm elections eased concerns about political risk, and the decline in crude oil prices also acted as a tailwind, leading to buying across a wide range of stocks.
However, after that, the market was hit directly by the fallout from the Philadelphia Semiconductor Index (SOX), which consists of major semiconductor-related stocks, falling more than 3% in the US market on the 4th. With the Democratic Party’s victory in the US midterm elections, concerns about a “slowdown in the pace of data center (DC) expansion” and “deceleration in AI infrastructure demand” resurfaced, and selling concentrated on high-priced high-tech stocks such as Advantest and SoftBank Group (SBG). The Nikkei Average’s decline exceeded 1,400 yen at one point.
On the other hand, the Tokyo Stock Price Index (TOPIX) rebounded for the first time in 4 trading days. We will unravel in detail today’s market structure, where the sharp drop in the Nikkei Average and the resilience of the TOPIX were clearly divided, with more than half of the Prime Market (1,130 stocks) rising.
Today’s Market Summary
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Nikkei Stock Average: 61,077.90 yen (-1,110.73 yen / -1.79%) *4th consecutive day of decline, lowest level in about 5.5 months (fell over 1,400 yen at one point)
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TOPIX (Tokyo Stock Price Index): 3940.39 (+45.01pt / +1.16%) *Rebounded for the first time in 4 trading days (about 70% of stocks rose)
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JPX Prime 150 Index: 1642.24 (+9.93pt / +0.61%) *Rebounded for the first time in 4 trading days
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TSE Prime Trading Value: approx. 11.785 trillion yen (over 11.7 trillion yen in massive trading, selective buying and selling clashed)
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Advances/Declines: Advances 1130 (approx. 70% of total) / Declines 410 / Unchanged 12
1. Main cause of the decline: Direct hit from the US SOX index “falling over 3%” and observations of a slowdown in US DC investment
The biggest pressure that caused the Nikkei Average to plummet today was the sharp drop in semiconductor and high-tech stocks that occurred in the US market the previous day.
Fear of “slower data center (DC) expansion” due to the US Democratic Party victory
With the opposition Democratic Party winning the US midterm elections held on the 3rd, there is deep-seated concern in the market regarding power supply issues for AI data centers and stricter regulations. As a result, the US SOX index plunged 3.3%, and in the Tokyo market, profit-taking selling increased in AI and semiconductor-related stocks that have a high contribution to the index.
【本日指数を下押しした主なAI・半導体・電子部品銘柄】
・アドバンテスト ────── 米SOX指数急落に追随し、大幅下落で日経平均の重荷に
・ソフトバンクグループ（SBG） ─ AI投資網への先行き警戒感から売り先行
・イビデン、キオクシア、フジクラ ── AIデータセンター・インフラ需要の短期減速懸念で急落
The fact that these major high-tech stocks were sold off across the board was the cause of the Nikkei Average dropping by more than 1,400 yen at one point.
2. Decisive divergence in indices: The resilience of TOPIX’s “+1.16% rebound” and “trading value of 11.7 trillion yen”
While the Nikkei Average fell by over 1,100 yen, the TOPIX (Tokyo Stock Price Index) rebounded strongly by 45.01 points (+1.16%). The number of rising stocks on the TSE Prime Market also reached 1,130 (about 70% of the total), and a clear sector rotation (cyclical buying back) functioned.
【本日のセクター別・買われた銘柄群】
○ 自動車・主力製造業 ─── トヨタ自動車（原油安・実効為替と自律反発狙いの買い）
○ 内需・サービス・エンタメ ─ リクルートホールディングス、バンダイナムコホールディングス
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× 集中売りを浴びた銘柄 ──── イビデン、キオクシア、フジクラ
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Positive effects from Trump’s remarks and lower crude oil prices With US President Trump stating that he would “accept” the election results, excessive concern about political turmoil receded. Furthermore, the decline in crude oil prices was perceived as a reduction in Japan’s import costs (a tailwind for corporate performance), and funds flowed into automobile stocks such as Toyota and major domestic demand stocks (Recruit, Bandai Namco HD).
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“Buying on dips for non-AI stocks” under massive trading of 11.7 trillion yen The TSE Prime trading value maintained a historically high level of 11.785 trillion yen. It was proven that a huge amount of funds that flowed out of AI and semiconductor stocks shifted directly to undervalued value stocks and domestic demand stocks with good performance.
3. Professional Perspective: The distortion between indices and the baton pass to the ‘full-scale interim earnings season’
Regarding today’s market structure, the view spreading among market participants is that ‘the reality of the market is not as bad as the Nikkei Average figure (down 1,100 yen) suggests.’
While the Nikkei Average is being dragged down by the sharp decline in some high-priced high-tech stocks, the rise in the TOPIX and the fact that 1,130 stocks gained value indicate that buying appetite for the fundamentals of Japanese stocks as a whole remains extremely strong.
With the US political event (midterm elections) now behind us, we are shifting completely into a phase of coolly assessing the concrete figures in the interim earnings (July-September quarter) from here on out.
Future perspectives investors should keep in mind
Although the Nikkei Average fell to its lowest level in about 5.5 months (61,077 yen), as indicated by the TOPIX rebound, the rise in 70% of stocks, and the massive trading volume of 11.7 trillion yen, this is not a risk-off scenario for the entire market, but rather a ‘diversification of funds from AI concentration to a wide range of sectors’ that is underway.
The two most important points for the future are as follows:
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Confirming the ‘bottoming out of high-tech stocks’ before the 60,000 yen mark The focus is on whether high-tech stocks like Advantest and SBG, which are undergoing a correction of short-term overheating, can absorb dip-buying and stop falling near the 60,000 yen milestone. If the actual demand for US mega-tech companies is confirmed, it will be a catalyst for a sharp rebound.
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Picking individual stocks with upward revisions to earnings in the ‘domestic interim earnings’ season As seen with the buying of Toyota and Recruit today, funds are spreading to high-performing stocks and those with strengthened shareholder returns that are detached from AI-related volatility. Let’s carefully pick up stocks that have revised their full-year forecasts upward or announced share buybacks in their earnings reports.
Do not be misled by the decline on the surface of the index; let’s coolly assess the ‘broad real demand buying’ reflected in the TOPIX and the fundamentals of individual earnings.
(*This article is for informational purposes only and does not recommend investment in any specific stock. Please make final investment decisions based on your own judgment.)