The Nikkei 225 fell as much as 4.84% after the US midterms before recovering most of the loss. Japanese chip stocks took the hardest hit, while other Asian markets held up better. ActionForex says the rebound leaves open whether the move was a knee-jerk reaction or the start of an AI-related reset.
The Nikkei 225 plunged 4.84% to 60,030.10, its lowest level since May, then rebounded toward 61,944 and cut its loss to approximately 1.8%.
Projected Democratic gains in Congress and key state governorships raised concerns about tighter restrictions on data-centre construction, and Japanese semiconductor and AI-related shares were hit particularly hard.
Texas puts data-centre rules in focus
In Texas, the projected Democratic gubernatorial victory brought renewed attention to proposals for restricting data-centre construction and withdrawing certain investment incentives. Wells Fargo estimates put the state's share of planned US data-centre capacity at approximately 27%.
However, ActionForex notes that potential regulation should not be confused with enacted policy. A Democratic Congress would still face the possibility of a presidential veto, and the source says the timing does not establish a direct causal link between the Texas results and the decline.
Chip stocks fall while the rest of Asia responds differently
Disco dropped approximately 10%, while SoftBank and Advantest lost more than 8%. Renesas fell around 7.6%, and Tokyo Electron declined about 7%.
Yet the rest of Asia did not respond in the same way. KOSPI recovered to trade slightly higher, Hong Kong's Hang Seng gained approximately 1%, and the Dollar Index weakened toward 101.44.
Support sits near 59,072 to 59,332
ActionForex's technical view puts the 61.8% retracement of 50,566.99 to 72,831.73 at 59,072.13, close to the support level at 59,332.43. The index also remains below its 55-day EMA, currently near 65,319.
A strong rebound from that region, followed by a break above 64,831.29 resistance, would keep the decline from 72,831.73 consistent with a correction, according to ActionForex. A decisive break through the broader support confluence, including 58,415.79, would substantially weaken that interpretation.
Source: ActionForex
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