Japan's Nikkei tumbles to five-month low as AI stocks face selling pressure

Japan's Nikkei 225 plunged as much as 4.84% to a five-month low of 60,030 on Wednesday before recovering some losses. The decline was driven by renewed selling in technology stocks amid growing concerns over the sustainability of the artificial intelligence (AI) rally.

Japanese shares also tracked losses in US stock futures following early election polls suggesting a possible Democratic takeover of both houses of Congress. Investors fear this could lead to tighter AI regulations and greater corporate oversight in the US.

Japanese technology companies, which have significant exposure to global AI growth, remained under pressure as investors turned cautious. AI and technology stocks led the losses, with Kioxia Holdings falling 5.4%, Advantest and Tokyo Electron declining 3.4% each, Taiyo Yuden dropping 8.3% and SoftBank Group losing 3.2%.