Nikkei sinks 2,134 points as AI and chip stocks sell off worldwide — August 20, 2026

Top U.S. Stories

• The Dow, S&P 500, and Nasdaq all closed higher on Wednesday, snapping a three-day losing streak, with the S&P 500 up 0.2% to 7,707.98, the Dow up 0.2% to 53,463.05, and the Nasdaq up 0.2% to 26,331.09. Why it matters: The rebound came after the U.S. Treasury said it would increase buybacks of long-dated government debt, easing the bond-yield spike that had been rattling markets.
• Moderna shares surged 177% after the company reported positive late-stage trial results for a melanoma vaccine developed with Merck.
• Trump paused threatened 50% tariffs on Canadian imports at the last minute, as the two countries work to finalize a trade deal. Why it matters: The tariffs would have hit roughly $20 billion of Canadian goods; the pause buys time for negotiators to lock in market-access and digital-trade terms.
• Prime Minister Sanae Takaichi of Japan called it “very regrettable” that the Trump administration sanctioned ICC President Tomoko Akane, a Japanese national, over the court’s actions against Israel and U.S. forces. Why it matters: It puts Tokyo in an awkward spot, balancing support for international law against its alliance with Washington.
• Russia has intensified missile and drone attacks on Ukraine ahead of Ukraine’s August 24 Independence Day, with reports suggesting Moscow may be preparing a large-scale strike on Kyiv.

Markets

Global markets were rattled by a sharp AI-and-chip stock selloff centered in Asia. Japan’s Nikkei 225 plunged 2,134.31 points, or 3.16%, to close at 65,326.42, falling below the 66,000 mark for the first time in about two weeks, as SoftBank Group, Advantest, and other AI/chip names were hit hard following Tuesday’s U.S. semiconductor selloff. South Korea’s KOSPI dropped 5.8% on similar chip-sector exposure. The dollar bought 159.09 yen as of August 19, with Japan’s long-term bond yields hitting their highest level since 1996 amid growing expectations that the Bank of Japan will raise rates as soon as September. WTI crude traded in the low-to-mid $85 range, briefly touching $86, rising for a third straight session on stalled U.S.-Iran talks.

Stocks in Focus

• SoftBank Group / Advantest (Japan): Led the Nikkei’s decline as AI/chip names sold off in sympathy with U.S. peers.
• Kioxia / Fujikura (Japan): Fell 12.6% and 9.73% respectively amid the broad semiconductor rout.
• Moderna (U.S.): Jumped 177% on strong melanoma vaccine trial data developed with Merck.

This is not a recommendation to buy or sell any security.

Compass Insight

Today’s throughline is interest rates. Rising expectations for a Bank of Japan hike pushed Japanese long-term yields to their highest since 1996, and that same rate anxiety spilled into a sharp selloff in AI and chip stocks across Asia. U.S. markets, by contrast, found relief after the Treasury moved to increase debt buybacks, easing bond-yield pressure and letting the Dow, S&P, and Nasdaq post modest gains. For households, a firmer yen and higher yields cut two ways: import costs may ease, but rising oil prices and eventual mortgage-rate resets could offset that relief over time. In the short run, expect AI-linked stocks to stay sensitive to every rate-related headline; over the medium term, the pace of the BOJ’s tightening — and its knock-on effect on borrowing costs — is the thing worth watching most closely.