Japan's Nikkei 225 plunged on Friday, suffering its third-largest point drop in history as the artificial-intelligence sell-off that hammered Wall Street spread across Asia, dragging South Korea's Kospi to a trading halt and pushing Tokyo's benchmark into bear-market territory.

The Nikkei fell 3,643.13 points, or 5.96 percent, to close at 57,434.77, after briefly losing more than 4,300 points. Its worst day since April 2025, it left the index about 21 percent below its June record peak.

Key Points

• The Nikkei 225 closed down 3,643.13 points, or 5.96 percent, at 57,434.77, its third-biggest point fall ever, after briefly dropping more than 7 percent intraday.
• The index is now about 21 percent below its June 22 record intraday peak of 72,831.73, crossing the 20 percent bear-market threshold.
• South Korea's Kospi tumbled as much as 8.7 percent to an intraday low of 4,911.28, triggering a trading halt.
• Chip and AI-linked stocks led the rout: Rohm fell about 20 percent, Furukawa Electric more than 19 percent, Resonac about 15 percent and Kioxia more than 12 percent.
• The sell-off followed Thursday's Wall Street rout, when the Nasdaq fell 5.5 percent and the Philadelphia Semiconductor Index dropped 12.3 percent.

What Happened

Selling hit Tokyo from the open and never let up. The Nikkei broke below 60,000 for the first time since May within the first hour, and by 10:25 a.m. local time it had fallen 7.09 percent to an intraday low of 56,745.81. It closed the morning down 5.27 percent at 57,858.61, then slid to 57,434.77, its lowest close since mid-April.

The drop exceeded the previous third-largest fall of 3,318.34 points set on October 15 this year, leaving only the two historic crashes of August 2024 and April 2025 ahead of it. The broader Topix finished 232.40 points, or 5.90 percent, lower at 3,707.99. Nearly every issue on the Tokyo Stock Exchange's top-tier Prime Market came under selling pressure, as funds fled to bonds and the yen, with the dollar in the upper 157 yen range.

Background and Context

The rout in Tokyo was the latest leg of a global repricing of artificial-intelligence stocks that began on Wall Street on Thursday. The Nasdaq Composite closed down 5.5 percent in its worst session since April 2025, wiping about $2 trillion off its market value, while the S&P 500 fell 4.4 percent and the Dow dropped 3.4 percent. The Philadelphia Semiconductor Index plunged 12.3 percent, its second-biggest fall on record, as Nvidia fell 9 percent and Advanced Micro Devices dropped more than 17 percent.

Investors are reassessing how quickly the enormous spending on AI data centres will pay off, and the Democrats' sweep of both houses of Congress in the November 3 midterm elections has added a new fear: that the new majorities will slow data-centre expansion with tougher construction and energy rules. That worry has hit Japanese suppliers hard, since their chips and materials feed the global AI buildout. Asian markets had already slid on Wednesday as the scale of the Democratic victory became clear, with the Nikkei falling about 3 percent that day.

Nikkei Crash Puts Japan in Bear Market Territory

At Friday's close, the Nikkei stood about 21 percent below its June 22 record intraday peak of 72,831.73. A fall of 20 percent or more from a peak defines a bear market, and the Nikkei crossed that line during trading. The damage was regional: South Korea's Kospi briefly fell more than 8 percent, triggering a trading halt, while Taiwan's Taiex was on course to enter a technical bear market of its own, down 20 percent from its peak.

Japan's chip and AI-linked names bore the brunt. Rohm tumbled about 20 percent in morning trading, Furukawa Electric lost more than 19 percent, Resonac fell roughly 15 percent and Kioxia dropped more than 12 percent. SoftBank Group declined around 11 percent, while Advantest suffered double-digit losses. All have exposure to chips, materials, computing infrastructure or AI investment.

Reactions and Quotes

"Japanese stocks were sold across the board amid growing uncertainty over the economic and political outlook following the U.S. midterm elections," said Maki Sawada, a Nomura Securities strategist.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said the selling had broadened beyond technology. "Concerns about an economic slowdown emerged as a new factor today, leading to broader selling," he said.

AMP chief economist Shane Oliver told Reuters that the election result had supplied a trigger for a correction in richly valued technology shares, and that they had been vulnerable even before the vote. He said it was too early to identify a bottom, but called the retreat potentially "more of a correction than a bear market" if economic conditions stayed sound.

Why It Matters

Japan is one of the world's largest stock markets and a critical link in the AI supply chain. Its firms make the chips, materials and equipment that data centres worldwide depend on, so a rout in Tokyo both reflects and deepens the global AI reassessment. When Japanese suppliers fall 15 to 20 percent in a day, it signals that investors now doubt the pace of orders that underpinned the sector's extraordinary rally.

For American investors, Friday's session in Asia is a warning about what may follow when U.S. markets open. The last two sessions have already wiped trillions of dollars from Wall Street, and President Donald Trump has blamed Democrats for the record $5.4 trillion market wipeout. If Asia stabilises over the weekend, Wall Street may find a floor; if not, the selling could feed on itself next week.

What Happens Next

All eyes now turn to Friday's session on Wall Street, where futures will show whether U.S. investors see the Asian plunge as a buying chance or a deeper correction. Rate traders have pushed the expected Federal Reserve rate rise to March, pricing only about 40 basis points of tightening. In Tokyo, traders will watch Monday's open for dip-buying, and the Bank of Japan's stance faces fresh scrutiny if the yen keeps climbing.

Frequently Asked Questions

How much did the Nikkei fall on Friday?

The Nikkei 225 closed down 3,643.13 points, or 5.96 percent, at 57,434.77, its third-largest point drop ever, after briefly falling more than 4,300 points.

What caused the Nikkei crash?

The sell-off followed Thursday's rout on Wall Street, where the Nasdaq fell 5.5 percent and semiconductor stocks plunged 12.3 percent. Investors fear the Democrats' midterm sweep will bring tougher rules on AI data centres, amid doubts over AI spending payoffs.

Is Japan's stock market in a bear market?

Yes, by the conventional definition. The Nikkei closed about 21 percent below its June 22 record intraday peak of 72,831.73, crossing the 20 percent threshold that marks a technical bear market.

What happened to South Korea's Kospi?

The Kospi tumbled as much as 8.7 percent to an intraday low of 4,911.28, triggering a trading halt. Taiwan's Taiex was also nearing a technical bear market, down 20 percent from its peak.

What does the Nikkei plunge mean for U.S. markets?

It signals that the AI sell-off has gone global. U.S. investors will watch Friday's Wall Street session closely: stability in New York could steady Asia on Monday, while further losses would deepen the correction.