Key Highlights

  • iShares MSCI Japan ETF (NYSEARCA:EWJ) faces a weak read on Thursday, October 22, 2026, after the Nikkei 225 fell about 3% in a broad Asian sell-off led by technology shares.
  • South Korea's Kospi dropped 3.5%, Hong Kong's Hang Seng fell 3% and Taiwan's benchmark lost 2%, while the MSCI Asia Pacific ex-Japan index fell more than 2%.
  • Mixed third-quarter results from Tesla and Meta raised doubts about the pace and return of AI spending, the theme that had supported Asian chip and hardware exporters.
  • Rising oil added pressure, with West Texas Intermediate above USD 100 and Brent above USD 112, both at their highest since May, which matters for an energy importer such as Japan.

What Happened in Asia on Thursday

iShares MSCI Japan ETF (NYSEARCA:EWJ) holds large and mid-sized Japanese companies, and its home market fell sharply on Thursday, October 22, 2026, with the Nikkei 225 down about 3%. The Kospi lost 3.5%, the Hang Seng fell 3% and Taiwan's benchmark dropped 2%. The MSCI All Country Asia Pacific ex-Japan index fell more than 2% to its lowest level in nearly three months. Technology shares led the losses after mixed results from Tesla (NASDAQ:TSLA) and Meta Platforms (NASDAQ:META) raised questions about AI spending. Tesla slipped about 3% after hours after lowering its capital spending plan, while Meta raised the low end of its spending range. China's CSI 300 entered a bear market, about 20% below its June high.

Why AI Doubts Travel to Tokyo

Japan's market carries large exposure to semiconductor equipment, electronic components and industrial machinery, which supply the data-centre build-out. iShares MSCI Japan ETF (NYSEARCA:EWJ) is therefore sensitive to any signal that US technology companies may slow or rethink capital spending. Korea and Taiwan show the same channel more directly, because memory and chip manufacturing dominate their indices, which explains the 3.5% Kospi decline. Oil is a second channel: Japan imports nearly all of its crude, so West Texas Intermediate above USD 100 and Brent above USD 112 raise input costs and weigh on the trade balance. For a US investor, the fund's return also depends on the yen against the US dollar, which adds a currency layer to equity moves.

Risks and What to Watch

The first risk for iShares MSCI Japan ETF (NYSEARCA:EWJ) is a further rotation out of AI-linked hardware if US megacap results disappoint. The second is energy: tanker attacks have spread beyond the Strait of Hormuz, and a drone attack on a Saudi oil field kept the supply risk premium high. The third is rates, as the US 10-year Treasury yield sat near 5.1% and the Fed raised rates on Wednesday, September 16, 2026. Asian markets fell even as Treasury yields eased, which points to growth and earnings concerns rather than pure rate pressure. Investors should watch the US open on Thursday, October 22, the Fed decision on Wednesday, October 28 and Microsoft results the same day.

Where Things Stand

The answer is that iShares MSCI Japan ETF (NYSEARCA:EWJ) is exposed because Japan supplies much of the hardware behind AI spending and imports nearly all of its oil. The Nikkei's roughly 3% fall marked the cost of both pressures arriving together. The next catalysts are the US session on Thursday, October 22, the Fed decision and Microsoft results on Wednesday, October 28, 2026. Currency moves can amplify equity swings, overseas markets can gap at the open, and this is not investment advice.