Nikkei 225 Crashes 7% as Wall Street’s AI Sell-Off Spreads to Japan

Japan’s stock market suffered one of its worst days in years on Friday, 6 November 2026, as the Nikkei 225 index plunged more than 7% in morning trading. The sell-off, which began on Wall Street a day earlier, spread quickly across Asia and dragged South Korea’s market down with it, raising fresh questions about whether the great artificial intelligence (AI) boom in stock markets is starting to unwind.

The Nikkei fell below 60,000 points for the first time since May, and by the middle of the day in Tokyo it was about 21% below its record high from June. That is the level at which market watchers start using the word “bear market” — a fall of 20% or more from a recent peak. Whether that label sticks will depend on where the market closes.

For ordinary savers and investors, days like this are a reminder of how fast confidence can disappear from markets, and how closely stock markets around the world are now tied to each other.

What happened in Tokyo today

Trading in Tokyo opened badly on Friday and got worse through the morning. The Nikkei 225, Japan’s best-known stock market index, dropped more than 7% at its lowest point, briefly falling below 57,000. By midday it had recovered some ground, trading at about 57,577 points — still down 5.7% on the day.

The previous close had been 61,078, so the market lost roughly 3,500 points in a single morning. The index had already fallen 1.79% on Thursday, but Friday’s drop was far bigger and far broader.

The wider Topix index, which covers many more Japanese companies than the Nikkei’s 225, fell about 5.8%. That matters because on Thursday the Topix had actually risen 1.16% while the Nikkei fell. On Thursday, most of the Nikkei’s 225 companies had even gained, despite the index going down. Friday was different: almost every stock fell. The selling was no longer limited to a handful of technology companies. It had spread across the whole market — a much more worrying sign.

The Nikkei is built in an unusual way. It is weighted by share price, not by the size of the company, which means very expensive shares can move the whole index sharply. Even so, a fall of this size across so many companies cannot be explained by the index’s construction alone.

At midday, the Nikkei stood about 21% below its record intraday peak of 72,831.73, reached on 22 June. A fall of 20% from a peak is the usual dividing line for a bear market, although traders say a closing level, rather than a level reached during the day, gives firmer confirmation. A bear market does not mean the market will keep falling. It is a label for a deep and lasting fall, and it often makes investors more cautious.

Why Japan’s market fell: Wall Street started it

The immediate trigger came from the United States. On Thursday, American technology stocks suffered their sharpest setback since April 2025. The Nasdaq Composite, the index packed with technology companies, plunged 5.5% — its biggest one-day drop in 19 months. The S&P 500, the broadest measure of the American market, lost 4.4%. American semiconductor shares fell 12.3%.

Two of the biggest names in AI led the fall. Nvidia, the company whose chips power most AI systems, fell 9.3%. Advanced Micro Devices (AMD) dropped 17.3%. Investors were asking a simple question: how quickly will the enormous sums being spent on AI infrastructure — the data centres, chips and power systems behind AI — start making money? Nobody has a clear answer, and on Thursday that uncertainty turned into heavy selling.

Japan is deeply tied to that question. Japanese companies supply many of the chips, materials and machines that go into AI systems. When investors worry about AI spending, Japanese suppliers are among the first to feel it.

The sell-off on Wall Street was the second sharp fall in a week. Findivoza reported on the Wall Street sell-off that wiped out the post-election rally and pushed the Nasdaq into correction territory on 5 November, and earlier in the week on Wall Street’s worst day since June, when AI spending fears wiped out more than $1 trillion in tech value. Friday’s fall in Tokyo showed the same fear crossing the Pacific.

The US election added a new worry

Another factor made things worse: politics. The Democratic Party’s victories in the US midterm elections on 3 November have added a new uncertainty for technology investors. Investors worry that greater scrutiny of data-centre construction could delay projects, and that tougher regulation of AI could eventually reduce orders for processors, electrical equipment and other parts supplied by Japanese companies.

That remains a risk rather than an established change in what companies plan to spend. No new law has been passed, and no major company has cancelled a data-centre project. But markets react to what might happen, not only to what has happened, and the fear of delays was enough to push shares down.

Shane Oliver, chief economist at AMP, told Reuters on Friday that the election result had supplied a trigger for a correction in richly valued technology shares, and that those shares had been vulnerable even before the vote. He said it was too early to identify a bottom, but described the retreat as potentially “more of a correction than a bear market” if the underlying economy remained sound.

Charu Chanana, a strategist at Saxo, cautioned against seeing the Democratic victories as the end of the AI boom, telling Reuters that technological leadership remained a priority for both political parties in the United States. She also described “an element of panic” as crowded and leveraged positions — bets made with borrowed money — were unwound at the same time, making a decline that was already under way even steeper.

Wataru Akiyama, a strategist at Nomura Securities, told Reuters on Thursday that money which had previously been flowing into AI and semiconductors had shifted to other sectors. Even so, he saw little prospect of a complete reversal in data-centre construction, given the strategic competition between Washington and Beijing.

The stocks hit hardest

The selling hit some of Japan’s biggest AI suppliers particularly hard. Rohm, a maker of semiconductors and electronic parts, tumbled about 20% in morning trading. Furukawa Electric, which makes cables and materials used in data centres and networks, lost more than 19%. Resonac, a chemicals and materials company, fell roughly 15%. Kioxia, a maker of memory chips, dropped more than 12%.

SoftBank Group, the investment giant with large stakes in AI companies, declined around 11% amid a large volume of sell orders. Advantest, which makes testing equipment for chips, suffered double-digit losses.

These companies do very different things, but they share one thing: exposure to chips, advanced materials, computing infrastructure or investment in the AI ecosystem. When the market doubts AI spending, they fall together.

The sell-off spreads across Asia

Japan was not alone. South Korea’s Kospi index tumbled as much as 8.7% in morning trading, falling below 5,000 points for the first time in nine months. At its lowest point it reached 4,911.28, against a previous close of 5,383.80. The fall was sharp enough to trigger a trading halt — a built-in pause designed to stop panic selling from spiralling out of control.

Investors sought the relative safety of government bonds as shares fell, a classic sign that fear, rather than careful calculation, was driving the market.

Oil prices moved in the opposite direction. Brent crude, the global benchmark, was trading about 1.35% higher at $99.63 a barrel in the morning, after closing at $98.29. Higher oil prices can add to worries about inflation, which makes it harder for central banks to cut interest rates — another reason stock markets were nervous.

Crash or correction? What the experts say

The honest answer is that nobody knows yet. A correction is a fall of 10% or more from a peak, and it is a normal part of how markets work. A bear market is a fall of 20% or more, and it usually lasts longer and does more damage to confidence.

The Nikkei has now crossed the 20% line during trading, but only its closing level will confirm whether it stays there. What is clear is that the market’s mood has changed quickly. In June, the Nikkei hit a record high of 72,831.73. Investors were pouring money into Japanese shares, attracted by the AI boom and by Japan’s efforts to improve how its companies are run. Five months later, the same market has lost more than a fifth of its value.

Three things will decide what happens next. First, whether American technology shares steady themselves or fall further when Wall Street reopens. Second, whether companies that spend on AI confirm their plans or start to cut back. And third, whether the political uncertainty in Washington turns into real rules that slow down data-centre building.

If the economy stays healthy and AI spending continues, many analysts expect this to be remembered as a sharp correction — painful, but not the end of the boom. If spending slows and profits disappoint, the fall could go further.

What does this mean for ordinary people?

Most people do not own Japanese shares directly, but market falls like this still matter. Pension funds and savings plans around the world hold shares in Japan and in American technology companies, so a sharp fall can show up in retirement savings. A falling stock market can also make companies more cautious about spending and hiring, and it can shake confidence more widely.

For anyone with investments, the usual advice from financial professionals is not to panic-sell during a sharp fall, because the worst days often come just before a recovery — but that is a general principle, not advice about any particular investment. What matters most is whether you are investing for the long term and whether you can afford the ups and downs along the way.

The Nikkei’s fall is also a reminder of how much the world’s markets now depend on a single story: artificial intelligence. When that story is strong, shares rise together. When it is doubted, they fall together — from New York to Tokyo to Seoul.

What to watch next

The next few trading days will be important. Watch whether the Nikkei can hold above 57,000, whether the Nasdaq steadies when Wall Street opens, and whether any big technology company changes its spending plans. Also watch the Bank of Japan: its governor, Kazuo Ueda, is due to speak at the International Monetary Fund’s central banking lecture in Washington on 6 November, and any hint about interest rates could move markets further.

For now, the message from Tokyo is simple. The AI boom that lifted markets to record highs is being tested, and the test is happening fast.

Frequently asked questions

How far did the Nikkei 225 fall on 6 November 2026?

The Nikkei 225 plunged more than 7% in morning trading on Friday, 6 November, briefly falling below 57,000. By midday in Tokyo it had recovered to about 57,577 points, still down 5.7% on the day. The broader Topix index fell about 5.8%.

Why did Japan’s stock market fall?

The main trigger was a sharp sell-off in US technology shares on Thursday, when the Nasdaq fell 5.5% and semiconductor shares dropped 12.3%. Investors are worried about how quickly huge AI investments will pay off, and about tougher regulation of AI and data centres after the Democrats’ victories in the US midterm elections on 3 November.

Is the Nikkei in a bear market?

Not officially yet. At midday the Nikkei was about 21% below its record peak of 72,831.73 from 22 June, which is past the usual 20% bear-market line. But traders say a closing level, rather than a level reached during the day, gives firmer confirmation.

Which Japanese companies were hit hardest?

Rohm fell about 20%, Furukawa Electric lost more than 19%, Resonac dropped roughly 15% and Kioxia fell more than 12%. SoftBank Group declined around 11% and Advantest suffered double-digit losses.

Did other Asian markets fall too?

Yes. South Korea’s Kospi tumbled as much as 8.7%, falling below 5,000 points for the first time in nine months and triggering a trading halt. Investors moved money into government bonds, which are seen as safer when shares fall.

Conclusion

Friday’s crash in Tokyo was not a local accident. It was the latest chapter in a global reassessment of the AI boom, driven by doubts about returns on AI spending, a sharp sell-off on Wall Street, and new political uncertainty in the United States. The Nikkei’s fall below 60,000 and its slide more than 20% from its June peak show how quickly confidence can turn. Whether this becomes a lasting bear market or a sharp correction will depend on what American tech shares and AI spending do next — and the whole world will be watching.

Sources

• Invezz, “Nikkei 225 crash today: why Japan stocks are plunging on November 6”, 6 November 2026 — https://invezz.com/news/2026/11/06/nikkei-225-crash-november-6-2026/
• AITopics, “Nikkei 225 crash, November 6 2026” — https://aitopics.org/doc/news:F40FE27F
• Finimize, “Nikkei sinks 5% as AI favorites lead Japan’s selloff” — https://finimize.com/content/nikkei-sinks-5-as-ai-favorites-lead-japans-selloff
• Upstox, “Asian markets crash: Nikkei 225 tumbles 7%, Kospi plummets 8.7% amid AI sell-off cues” — https://upstox.com/news/market-news/trading/asian-markets-crash-nikkei-225-tumbles-7-kospi-plummets-8-7-amid-ai-sell-off-cues-what-s-impacting-global-markets/article-203093/
• KuCoin News, “Japan and South Korea stocks plunge amid AI investment fears” — https://www.kucoin.com/news/flash/japan-and-south-korea-stocks-plunge-amid-ai-investment-fears

This article is for general information and education only. It is not legal or financial advice.