TOKYO — Tuesday, November 18, 2025. Japan’s stock market suffered one of its sharpest single‑day declines of the year as a global tech sell‑off met rising domestic bond yields and fresh geopolitical tension with China.
Closing snapshot (JST):
- Nikkei 225:48,702.98 (‑1,620.93, ‑3.22%) — biggest percentage drop since April 9. 1
- TOPIX:3,251.10 (‑2.88%) — all 33 industry groups finished lower. 2
What drove the sell‑off
1) Global tech wobble ahead of Nvidia earnings. Overnight weakness in U.S. megacap AI names spilled into Asia, knocking Japanese chip‑exposed heavyweights and dragging regional benchmarks to one‑month lows. Investors are bracing for Nvidia’s results on Wednesday, a bellwether for the AI trade. 3
2) Yields surge on fiscal worries; yen volatility returns. Super‑long Japanese government bond (JGB) yields climbed again, with the 20‑year yield at a 26‑year high as markets price a larger‑than‑expected stimulus and fret about fiscal sustainability. The yen hovered near ¥155 per U.S. dollar, after touching a nine‑month low; Finance Minister Satsuki Katayama said she was “alarmed” by the currency’s recent one‑sided moves. 4
3) Japan–China tensions hit tourism and sentiment. A diplomatic spat over remarks by Prime Minister Sanae Takaichi on Taiwan intensified, prompting Tokyo to warn Japanese citizens in China to heighten vigilance. Travel‑linked shares tumbled amid signs of cancellations from Chinese visitors. 5
Sector and stock movers
Selling was broad‑based, led by technology and communications. SoftBank Group fell around 7%, while Tokyo Electron and Advantest dropped roughly 5% and 3–4%, respectively, mirroring weakness in global semiconductor plays. 6
Defensives and idiosyncratic gainers were rare. The day’s notable risers on the Nikkei included Dentsu, JGC, and NH Foods, bucking the downtrend. 7
Policy watch: BoJ–PM meeting and the next rate decision
Markets also focused on fiscal‑monetary coordination. BoJ Governor Kazuo Ueda was set to hold his first bilateral meeting with Prime Minister Takaichi on Tuesday — a timely check‑in as the yen swings and long‑end yields rise. The next BoJ policy meeting is scheduled for Dec. 18–19. 8
Traders continue to debate whether the BoJ could lift rates toward 0.75% around year‑end, but the calculus is complicated by the latest macro data. Japan’s economy contracted at a 1.8% annualized pace in Q3, the first decline in six quarters, putting a premium on any stimulus‑led support. 9
Macro backdrop: from records to a reality check
Just two weeks ago, Japanese equities were riding high on the “Takaichi trade,” with the Nikkei hitting an intraday record 52,636.87 on Nov. 4 amid AI euphoria and a weak yen. Today’s break below the 50,000 psychological line deepened the reversal as positioning unwound. 10
Bond markets have amplified that rethink. The 20‑year JGB yield touching multi‑decade highs and a steeper curve reflect concerns that a stimulus near ¥23 trillion could mean more duration supply or delayed rate normalization — both headwinds for equities sensitive to discount rates. 11
What to watch next
- Nvidia earnings (Wed, U.S.) — a beat/cut in AI capex guidance will likely swing chip tools (Tokyo Electron, Disco) and testers (Advantest). 12
- BoJ signals — any hint from the Ueda–Takaichi meeting or pre‑meeting commentary on inflation/wages could sway USD/JPY and equity risk appetite. 8
- Trade data (Thu, Nov. 20 JST) — October trade balance and export momentum will help gauge how tariffs and the currency are filtering into the real economy. 13
- China–Japan diplomacy — further travel advisories or cultural/commerce curbs could prolong pressure on retail, airlines, and inbound‑sensitive names. 5
Bottom line
November 18 marked a sentiment break in Tokyo: global AI jitters met higher domestic rates and a geopolitical chill, knocking the Nikkei to 48,703 and placing the post‑October melt‑up under scrutiny. Near‑term direction now hinges on Nvidia’s read‑through for the AI cycle, yen/yield stability, and whether Tokyo and Beijing can de‑escalate — with the BoJ’s December meeting looming as the next major catalyst for Japan risk assets. 2
Methodology & sources: Closing levels and market breadth are from Japan market feeds and local press; macro and policy context from international wires and official calendars. Key references include Xinhua (close, magnitude), The Irish Times (largest drop since April; record‑high context), Kabushiki Shimbun (official closes; breadth; sector color), Reuters and AP (global tech backdrop; yen, yields; PM–BoJ meeting; China tensions), Investing.com (day’s winners), and schedule trackers for upcoming BoJ and trade releases. 1
