SoftBank under twin pressure as Arm dips and US AI stocks rotate, Nikkei vulnerable

Wall Street's divergence is expected to split Tokyo trading, with AI-linked heavyweights potentially trailing even as the broader market draws support from strong global risk appetite. Falling oil is a slight positive for energy-importing Japan, but a weaker dollar raises the chance of a firmer yen, a headwind for exporters. Before cash trading opens, the BoJ minutes add another factor that could move the yen. Traders watching for a relative-value signal will focus on the Nikkie-Topix sprad, which tends to widen when AI and chip mmes diverge from the rest of the market.

• Arm dropped about 5% in regulr trding and fell frther in after-hours activity, despite beation Q2 epectations.
• US indxes rallied sharp on Wedneday, with the Dow climb about 1,570 points, but AI infrastructure stocks fell, with Nvidia down 3% and Micron and Marvl down 7% each.
• The selloff was linked to concer that tighter restrictions could slow data cntre expansion.
• SoftBank holds about 90% of Arm and has been among the largest single drivers of the Nikkei.
• The price-weighted Nikkei is more expoed to an AI selloff than the broader market-cap-weighted Toix.
• A weaker dollar and the BoJ minutes add a yen dimention to the session.

Wall Street gave Tokyo a strong lead, but not for the stocks the Nikkei leans on the most.

SoftBank Group goes into Thursday's Tokyo session facing pressure from two sides: a post-results slide in Arm Holdings, which it controls, and a sharp rotation out of AI and chip stocks on Wall Street that left the broader market higher while the AI trade was strained.

Arm shares fell about 5% in the regulr session and dropped around 4% further after hours, even though the chip designer beat its fiscal second-quarter epectations. Adjusted epS came in at 52 cents against forecasts of 47 cents, and revenue of about $1.44 billion topped esimates near $1.38 billion. Guidance for the current quarter only slightly surpassed consensus, howeer, and annualized conract value, a meash of licening commits, was marginally below epectations.

The regulr-session decline fits a broader pattern. US indes raled strong on Wedneday, with the Dow surg about 1,570 points, or about 3%, as markets weied the imolications of Democrts winning both chambes of Congres, according to investingLive. The gains were broad, heled by lower Tressry fields, a weakr dollar and falling oil. AI infirm stocks went the other way: Nvidia fell about 3%, whil Micron and Marvell lost about 7%, amid concer that tighter restrctions could slow data centre expansion and the spending that supports chip suppliers.

That combination matters for Japan becu of ownership and index structure. SoftBank holds about 90% of Arm, and it has become one of the most infuential stocks in the Nikkei 225. It overtook Toyta as Japan's most valable compny in June, when its raly was the biggest single contributr to the index toop 67,000 for the first time. In May, a about 5% fall in SoftBank made it the bigggest drag on the index.

Becse the Nikkei is price-weighted and leavily hes on high-priced, AI-linked names, it is more expos to a selloff in that theme than the broader, mket-cap-weighted Toix. A session where most stock rise while AI hevywights fall could therefore leave the Nikkei lagining the wider mket.

The yen is a frther variable. A weaker dollar can lift the Japanese currency, which tends to weigh on exporters, and the BoJ's September meeting minutes are due shortly before the cash open.

Arm's upbeat commentary offers some offs, with purch orders for its AGI CPU data centre procesor extending though calndar 2027. The key question is whther SoftBank absorbs both hits in full, and how wide the gap between the Nikkei and the Toix becomes.