Tokyo stocks end lower in volatile trade as US Democrats retake Congress

Tokyo stocks closed lower on Wednesday amid volatile trading, following media projections that Democrats had secured control of both chambers of the U.S. Congress. The Nikkei Stock Average, comprising 225 issues, slipped 893.23 points, or 1.42 percent, from Monday's closing figure of 62,188.63. The broader Topix index fell 34.90 points, or 0.89 percent, to 3,895.38.

Trading on the top-tier Prime Market saw declines in nonferrous metal, oil, coal product, and mining sectors. The U.S. dollar weakened, briefly dipping to the lower 157 yen mark, as the yen was purchased due to expectations of narrowing the interest rate gap between the U.S. and Japan. Although Japanese Treasury yields declined as concerns over U.S. fiscal deterioration eased, concerns about possible stricter AI regulations under a Democratic-led government led to heavy selling pressure on tech-heavy Nikkei shares.

The Democrats' stronger-than-expected performance in the U.S. elections prompted speculative selling, leaving investors cautious and limiting buying interest. As the Nikkei index dipped briefly below 3,000 points and neared the psychologically significant 60,000 mark, both indices recovered as President Donald Trump accepted the election results and indicated his willingness to collaborate with Democrats.

Reports on the public holiday highlighted that major U.S. technology firms were seeking further funding, raising doubts about the profitability and sustainability of such investments.