Editor's Choice: US anti-data center sentiment spreads, hitting Asian markets

Akito Tanaka shares his weekly reflections and recommendations Japanese benchmark Nikkei Stock Average dropped to below the 60,000 threshold for the first time since mid-May. (Photo by Kazuho Fujiwara) Hello from Tokyo. The U.S. midterm results are out, and the Democrats won control of both chambers of Congress. The party's unexpectedly strong performance sent shock waves through Asian stock markets, with the Tokyo Stock Exchange posting sharp losses. As I highlighted in last week's newsletter, Nikkei Asia covered the election extensively through ourlive blog. The results were an emphatic rebuke of U.S. President Donald Trump from American voters. The Trump administration's attacks on Iran added to the inflation burden already weighing on American households, while his sweeping tariffs on trading partners fueled price pressures. So what do the midterm election results mean for Asia? First, one trend Nikkei Asia closely watched throughout the election campaign has been starkly underscored:growing public opposition to data center construction. In Texas, one of the country's largest data center hubs, voters ousted the incumbent Republican governor and elected a Democrat. The incoming governor has openly opposed the rapid expansion of data centers. Democrats also prevailed in Ohio, another state known for its concentration of data centers. Investors interpreted the Democrats' sweep as a headwind for the technology sector, triggering a sell-off in U.S. tech stocks on Thursday. The weaknessspread to Asian markets on Friday, with Tokyo's Nikkei Stock Average falling below the 60,000 level for the first time in nearly six months. America's emerging anti-data center movement, whichwill affect Asia's technology supply chain, is likely to become a major theme for Nikkei Asia's coverage going forward. Having lost majorities in both the House of Representatives and the Senate, President Trump now faces significant constraints on domestic policy. As a result, he may increasingly turn his attention to foreign policy, where congressional limits are less direct. One immediate focal point will be theAPEC leaders summitlater this month, where Trump could pursue surprising deals with major powers such as China and Russia. The president's stance on the Iran war, widely viewed as a factor in his party's defeat, will also have important implications for Asia's energy policies. We urge you to exploreNikkei Asia's coveragefor more insight. 1.Japanese motor manufacturer Nidecrisks being delisted from the Tokyo Stock Exchange following turmoil stemming from accounting irregularities. The Kyoto-based company, with manufacturing and customer networks across Asia, possesses strong technological capabilities and aims to remain listed. But analysts and an activist investor are skeptical about whether it can reform its finances and corporate culture on its own. New CEO Michio Kaida is already facing a raft of tough challenges. 2. Facing public anger, potential economic losses and reputational damage overthe haze from Indonesia's forest and peatland fires, Singapore threatened plantation companies with legal action if they did not address the pollution. However, events last month showed how hard it will be for the city-state to prevent future haze crises when fires occur beyond its jurisdiction and it must rely on decisive action by Indonesia's government. 3. Since global index provider MSCI warned early this year that it could downgradethe Indonesian stock market, authorities have been implementing reforms to boost investor confidence. But some of their maneuvering has sparked worry among market participants. Our reporter finds out why. Sign up for the weeklyEditor-in-chief's picks newsletter here