Global Market: Japan’s Nikkei slides over 2% as AI stock selloff deepens on US chip weakness

Japan’s Nikkei share average fell sharply on Tuesday, extending its losing streak to a fourth session as a selloff in artificial intelligence-related stocks gathered pace following losses in US semiconductor shares, while geopolitical tensions further dampened investor sentiment, according to a report by Reuters.

The benchmark Nikkei 225 dropped 2.64% to 67,206.79 in early trading, while the broader Topix index slipped 0.56% to 4,081.76.

Wall Street’s tech-heavy Nasdaq Composite declined 0.44% on Monday as chipmakers came under pressure. Uncertainty over the US Federal Reserve’s next policy move, alongside geopolitical risks in the Middle East and Ukraine, also kept investors cautious.


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According to Reuters, concerns over the returns on massive investments in AI infrastructure and hyperscalers have weighed on sentiment, with market participants also assessing the potential impact of geopolitical developments on energy prices.

Maki Sawada, an equities strategist at Nomura Securities, said Japanese equities were being affected by the downturn in US semiconductor-related shares. Concerns over an attack on a Saudi Arabian airport and uncertainty surrounding the feasibility of a ceasefire agreement between Russia and Ukraine also contributed to the cautious mood, the report stated.

Also Read | Global Market Today: Asian shares slide as chip stocks tumble; investors eye US earnings, CPI

Japan wholesale prices surge
Economic data released on Tuesday added to concerns over inflationary pressures. Japan’s wholesale prices rose 6.8% year-on-year in September, while yen-based import prices surged 24.5%, highlighting the potential impact of higher import costs on businesses and the broader economy.

Rising energy prices could further complicate the outlook for Japanese companies, particularly if geopolitical tensions disrupt supplies or push commodity prices higher.

Semiconductor stocks lead losses
Nonferrous metal stocks were the worst-performing industry group on the Topix, falling 4.79%. Marine transportation shares bucked the broader market weakness, rising 3.35%.

Within the Nikkei 225, 129 stocks advanced, while 96 declined.

Kioxia Holdings was the biggest percentage loser, tumbling 13.02%. Taiyo Yuden fell 9.34%, while Kokusai Electric dropped 9.19%, reflecting the pressure on technology and semiconductor-related shares.

Shipping stocks were among the strongest performers. Kawasaki Kisen Kaisha rose 4.07%, while Mitsui O.S.K. Lines gained 3.81% and was on track for a record-high close. Pan Pacific International advanced 3.36%.

The divergence between semiconductor-related stocks and shipping companies underscored uneven sector performance as investors weighed global technology-sector weakness against broader economic and geopolitical risks, according to Reuters.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)