Early vote counts from the US midterm elections indicate a growing likelihood of a Democratic victory, sending Japan's technology-heavy Nikkei 225 index down more than 4%; some strategists had previously warned that such a scenario would pressure AI-related shares. Tokyo markets were closed Tuesday for a holiday.

The Nikkei fell 4.2% to 60,455.95, with chip and AI stocks posting the weakest performance, including Taiyo Yuden, Kioxia, and Furukawa Electric. The Topix index dropped 2.8% to 3,819.54.

Masahiro Yamaguchi, head of investment research at Sumitomo Mitsui Trust Bank, said global stock markets have begun pricing in the view that a Democratic advantage would be negative for AI-related shares. He noted that after similar moves in overseas markets, Japan 鈥?which was closed Tuesday 鈥?appeared to see some delayed unwinding of AI-related positions.

Voting has ended across most of the United States, and Democrats made early gains in the battle for congressional majorities. Prediction site Kalshi puts the probability of Democrats winning the House at about 99%, with a similar likelihood of winning the Senate, suggesting Democrats could sweep both chambers of Congress.