Japan's Nikkei rebounds 2% after tech stock rout

Japan's Nikkei share average rebounded on Monday after a sharp selloff in technology stocks last week pushed the benchmark into bear market territory, with investors tracking a recovery in US technology shares and developments in the Middle East, Reuters reported.

The Nikkei 225 rose 2% to 58,584.11 in early trade, recovering some of Friday's 6% slump that had dragged the index more than 20% below its record high reached in June. The broader Topix index gained 2.8% to 3,810.91, Reuters reported.

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The recovery followed gains on Wall Street on Friday, when the Nasdaq Composite advanced 1.09% and the S&P 500 rose 0.32%, supported by a rebound in information technology stocks.

Nvidia and Tesla recovered after suffering sharp losses earlier in the week amid concerns that Democratic victories in the US elections could lead to tighter artificial intelligence regulations and curb spending on data centres.

However, market sentiment remained cautious over the outlook for technology stocks. According to Reuters, Takuma Ikemoto, a market analyst at Tokai Tokyo Intelligence Laboratory, said concerns over potential US policy changes, including AI regulation, remained deep-rooted and could limit further gains once initial buying subsided.

Read more: Wall Street grapples with $5.7 trillion rout as AI bets unwind

Geopolitical developments also remained in focus. US President Donald Trump said on Sunday that he was highly unlikely to order fresh attacks on Iran as long as negotiations continued, with Qatar mediating the discussions. However, both sides reported that vessels had been hit in or near the Strait of Hormuz.

The eight-month conflict has disrupted energy flows through the strategically important region, adding to uncertainty in global markets. Market breadth on the Nikkei was overwhelmingly positive, with 214 of the benchmark's 224 constituents trading higher, while 10 declined.

Renesas Electronics led the gainers, rising 6.64%, followed by Japan Steel Works, which advanced 6.41%. Baycurrent gained 5.88% and was on track for a record-high closing level.

On the other hand, Tokyu Fudosan Holdings was the biggest loser, falling 5.41%. SoftBank Group declined 4.73% and was heading for its lowest close since August 2025, while Mitsui Fudosan dropped 4.50%.

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