The Japanese market has been falling since the open on November 4, and tech stocks are falling the hardest. SoftBank and the other stocks that Tokyo classifies as part of the "AI basket" are trading worse than the market.
The Nikkei 225 is the main index of the Tokyo Stock Exchange. It includes the 225 largest companies in Japan. SoftBank is a Japanese holding company and one of the largest investors in AI companies.
Reuters links the sell-off to the US elections. Investors fear that a Democratic victory will lead to tighter regulation of artificial intelligence. For a trader, this means that Japanese indices are currently being driven by American politics.
Who is falling the hardest?
- Nikkei 225 - losing ground from the very open of the session.
- SoftBank - trading worse than the market.
- The "AI basket" - the other tech stocks that Tokyo sees as a bet on artificial intelligence.
Why did the market turn?
The reason is not domestic. Japanese investors are pricing in American politics.
- A bet on regulation. Democrats are seen as supporters of stricter oversight of AI.
- Earnings risk. For the market, this is a threat to the future revenue of the tech sector.
- No local trigger. There are no domestic reasons for a sell-off in Japan.
What does this mean for a trader?
Tokyo is trading the American theme. The Japanese tech segment has long moved as a derivative of the AI theme in the US.
While votes are being counted in the US, Tokyo opens first. It reacts to news from Washington before any other venue.
Key point: the move in the Nikkei 225 began before the US session. It's worth keeping political events at hand in the economic calendar, and the instrument for working with indices - picked out in advance.
What happens next?
Watch the vote count in the US. Until the election outcome is clear, Japanese AI stocks remain hostage to news from Washington.
Did you see the morning plunge in the Nikkei?
Tokyo opens when the US session hasn't started yet. Moves like this pass by almost every trader. What gets in the way isn't analysis but account size: with a deposit of a few thousand, even a correctly caught index decline produces an amount you won't find in your monthly total. prop trading works differently: you pay for selection, trade the company's capital within its risk limits, and take an agreed share of the result. It makes sense to understand this mechanic before the next morning like this.