Nikkei posts third-biggest drop as US Democratic wins hit AI stocks

The Nikkei average posted its third-largest point drop ever on Friday, plunging over 3,600 points to close below 60,000 for the first time in six months, triggered by a global selloff in AI-related stocks following Democratic victories in US elections. The selloff was sparked by a 5.5% plunge in the Nasdaq and a drop of over 1,800 points in the Dow, driven by concerns over stricter regulation of data centers after Democratic gubernatorial candidates, including Texas' Gina Hinojosa, won on platforms calling for construction moratoriums. Japanese brokerages were flooded with calls from panicked investors. The Nikkei fell as much as 4,332 points intraday before closing at 57,434, marking the third-largest decline after August 2024 and the day after the 1987 Black Monday. Experts remain divided on whether the AI market is a bubble or will recover, with some calling the drop temporary and others viewing it as a potential game-changer for Japanese financial markets.