TOKYO –
Japan’s benchmark Nikkei 225 index plunged 3,643 points, or 5.96%, to close at 57,435 on Friday, November 6, 2026, marking its fifth consecutive daily decline and one of the largest point losses in its history, as a global selloff in technology stocks spread across the Tokyo market and raised concerns about the sustainability of artificial intelligence investment and corporate valuations.
The decline accelerated a turbulent week for Japanese equities, with the Nikkei shedding more than 7,200 points over five trading sessions. The benchmark has fallen approximately 11.2% from its October 29 closing level of 64,659, reversing a substantial portion of its earlier gains and exposing the market’s vulnerability to changes in international investor sentiment.
Selling was widespread across the Tokyo Stock Exchange, rather than concentrated in the semiconductor and technology companies that have driven much of the market’s recent performance. The broader TOPIX index fell 232.40 points, or 5.90%, to 3,707.99, with all 33 industry sectors recording losses. Only 21 companies in the Prime Market advanced, while 1,523 declined, highlighting the severity of the retreat.
The market opened sharply lower following a steep decline on Wall Street on Thursday, where renewed doubts about the valuation of artificial intelligence companies triggered selling across major technology shares. Japanese investors reacted by reducing exposure to semiconductor equipment manufacturers, electronics companies and other businesses closely linked to global technology investment.
The Nikkei opened at 60,374, its highest level of the day, before sliding to an intraday low of 56,746. Although prices recovered modestly toward the close, the market failed to establish a sustained rebound, suggesting that investors remained reluctant to take new positions ahead of further developments in overseas markets.
SoftBank Group, semiconductor testing equipment maker Advantest and chipmaking equipment manufacturer Tokyo Electron were among the companies weighing heavily on the benchmark. Fast Retailing and Recruit Holdings also contributed to the decline, illustrating how the selloff spread beyond companies directly involved in artificial intelligence infrastructure.
The correction reflects growing concern that the enormous investment commitments made by global technology companies may take longer than expected to generate returns. Japanese semiconductor manufacturers and equipment suppliers have benefited from the rapid expansion of data centers and demand for advanced computing capacity, making their valuations particularly sensitive to any reassessment of future AI spending.
The decline also spread to sectors traditionally considered less exposed to technology investment. Food manufacturers suffered particularly heavy selling, with the sector index falling 10.02%, while oil and coal product companies declined 8.38%. The breadth of the losses indicated that investors were reducing overall equity exposure rather than simply rotating between industries.
Trading activity intensified as prices fell, with turnover on the Prime Market reaching approximately 12.48 trillion yen, reflecting substantial repositioning by domestic institutions and overseas investors.
The financial turmoil has also introduced a new challenge for Prime Minister Sanae Takaichi’s economic program. Takaichi said the government was closely monitoring market developments while maintaining its commitment to stimulating investment and strengthening Japan’s economic security. The administration intends to channel proceeds from the Bank of Japan’s sales of exchange-traded funds into strategically important industries and growth initiatives.
The BOJ has raised its annual target for ETF sales from 330 billion yen to 860 billion yen, with the additional proceeds expected to support government investment priorities and the redemption of bonds issued to finance public spending. However, the market correction has raised questions about how falling asset prices might affect government revenue, investment confidence and the financing of future economic measures.
Monetary policy expectations have also become more complicated. Before the latest market turmoil, investors were increasingly anticipating another BOJ interest rate increase, potentially in December, as stronger wage growth and persistent inflation supported the case for further monetary normalization. A prolonged decline in equities could encourage policymakers to proceed more cautiously, particularly if financial instability begins affecting corporate investment or household spending.
Japan’s currency market experienced considerable volatility as investors responded to the collapse in share prices. The yen initially strengthened against the dollar as demand for relatively safer assets increased, before surrendering part of those gains later in the session. At 5 p.m. on November 6, the dollar traded at approximately 157.95 yen, leaving the Japanese currency modestly stronger than the previous day.
Japanese government bonds attracted buying interest as investors sought alternatives to equities. The yield on the benchmark 10-year government bond fell by 0.12 percentage point to approximately 2.635%, reflecting a shift toward fixed-income securities and changing expectations about the timing of future interest rate increases.
The selloff coincided with a significant round of corporate earnings announcements that revealed a more resilient picture of Japanese business performance than equity market movements alone suggested.
Toyota Motor, Japan’s largest automaker, raised its full-year net profit forecast for the fiscal year ending March 2027 by nearly 10% to 3.57 trillion yen, up from its previous projection of 3.25 trillion yen. The company reported a 26.1% increase in first-half net profit to 2.24 trillion yen, while operating profit rose 9.2% to approximately 2.19 trillion yen. Revenue increased 9.5% to 26.96 trillion yen, a record for the six-month period.
The automaker nevertheless lowered its full-year revenue forecast from 54 trillion yen to 53.5 trillion yen, pointing to a mixed operating environment in which profitability improvements have been accompanied by continued uncertainty over global demand and market conditions. Toyota shares declined on Friday alongside other major Japanese automakers, reversing part of the previous day’s gains.
Mitsubishi Heavy Industries delivered another substantial earnings upgrade on November 6, raising its forecast for full-year net profit by 15.8% to 440 billion yen. The revised outlook represents an expected increase of 32.5% from the previous fiscal year and would establish another record for the industrial group.
The company reported that first-half net profit surged 76.9% to 203.3 billion yen, while revenue increased 19.4% to 2.52 trillion yen. Mitsubishi Heavy also raised its annual revenue projection to 6 trillion yen from 5.4 trillion yen, underscoring the strength of demand across its industrial operations, including businesses connected to energy systems, aerospace and defense.
The earnings upgrade highlighted the expanding importance of large industrial manufacturers in Japan’s economic strategy, particularly as government priorities increasingly emphasize defense capabilities, energy security and advanced manufacturing.
Nintendo shares also came under pressure despite reporting strong earnings for the six months through September. The company’s operating profit increased 49% from a year earlier, but its decision to leave its full-year forecast unchanged disappointed investors who had anticipated a more substantial upward revision. The reaction illustrated the demanding expectations already reflected in the valuations of major Japanese companies.
Sony Group similarly struggled to sustain an initial positive market reaction to its earnings, with its shares weakening as the broader selloff intensified.
Sanrio, the company behind Hello Kitty, reported first-half revenue of 107.73 billion yen, an increase of 22.9%, supported by international character licensing and merchandise sales. Operating profit climbed 9.4% to 42.88 billion yen, while net profit increased 6.1% to 29.2 billion yen, setting first-half records.
The company’s licensing business benefited from continued demand for its characters across multiple international markets, including increased commercial activity involving Pompompurin, which is celebrating its 30th anniversary. Sanrio maintained its full-year operating profit forecast of 89.5 billion yen, reflecting expectations for continued growth in its intellectual property business.
Telecommunications group KDDI reported a 4.7% increase in first-half revenue to approximately 3.05 trillion yen, while operating profit edged up 0.8% to 559.3 billion yen. Net profit attributable to shareholders increased 0.9% to 363.3 billion yen, indicating relatively stable performance in an industry characterized by recurring customer revenue and intense competition.
The latest company results suggest that Japan’s corporate earnings environment remains uneven rather than uniformly weak. Export-oriented manufacturers, technology companies and consumer brands continue to face different combinations of currency exposure, overseas demand, investment requirements and pricing pressures, making individual earnings performance increasingly important as investors reassess equity valuations.
Meanwhile, fresh labor market data provided further evidence of strengthening wage growth. Figures released by the Ministry of Health, Labor and Welfare on November 6 showed that average monthly cash earnings rose 4.6% from a year earlier in September to 311,409 yen among establishments employing at least five workers.
Regularly paid wages increased 3.6%, while scheduled wages excluding overtime and other irregular payments rose 3.7%. The sustained increase in nominal earnings reinforces the view that Japanese companies are responding to labor shortages and higher living costs by raising employee compensation, a development closely watched by the BOJ as it assesses the prospects for durable inflation and domestic consumption.
Wage growth of at least 3% has now continued for eight consecutive months, a pace not sustained for more than three decades. The figures offer encouragement to policymakers seeking a stronger cycle of wage increases and consumer spending, although the extent to which higher nominal pay translates into improved household purchasing power remains dependent on inflation.
The combination of stronger wages, substantial corporate earnings upgrades and a sharp deterioration in equity valuations has created an unusually complex economic environment. While Japan’s underlying business activity continues to show areas of strength, the international reassessment of technology investment has introduced considerable uncertainty into financial markets, leaving investors increasingly focused on the outlook for global AI spending, US monetary and regulatory policy, and the BOJ’s next interest rate decision.
Source: TBS
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: newsonjapan.com
