Nikkei Plunges Over 4% Amid Global Tech Selloff as Chip Stocks Face Steep Losses

Nikkei Plunges Over 4% Amid Global Tech Selloff as Chip Stocks Face Steep Losses​

Japan's stock market experienced a sharp decline on Tuesday, with the benchmark Nikkei share average tumbling more than 4%. The heavy losses were primarily concentrated in chip-related stocks, reflecting heightened caution among investors ahead of major earnings reports across global technology firms.

The Nikkei index fell 4.34% to settle at 62,112.91 by 0223 GMT. Simultaneously, the broader Topix index declined 2.76%, closing at 3,953.88. This significant market weakness was driven chiefly by artificial intelligence-related stocks, which continued their slide following the downward trend seen in U.S. technology shares.

Impact of Global Tech Selloff on Japanese Market​

The decline was strongly influenced by international technology trends, with a global tech selloff intensifying across markets. Overnight trading saw Nvidia shares dropping 4.9%. The Philadelphia Semiconductor Index also declined another 2.2%, having fallen 21% from its record high recorded on June 22.

Japanese chipmakers faced considerable distress during the session. Memory chip maker Kioxia shed 18% of its value. Similarly, semiconductor equipment providers Advantest and Tokyo Electron both saw drops of around 10%.

Broader Market Dynamics and Sectoral Shifts​

The Nikkei has now dropped over 14% from the record high it achieved in mid-June. This downturn reflects concerns surrounding aggressive artificial intelligence spending patterns among major global technology companies, weighing heavily on chip valuations, Reuters reported.

Investors are reportedly focused keenly on upcoming earnings announcements from tech giants in both Japan and the United States. Market participants viewed the recent weakness not as a reflection of Japan's overall economic health but rather as a necessary correction within high-flying technology names.

Diversification and Stock Market Breadth​

Despite the overall market slump, there were notable signs of differentiation within the Japanese stock exchange. Some software and computer-related stocks showed resilience, with Shift and Fujitsu gaining nearly 4% each. Nomura Research Institute also advanced by 2.5%.

The financial sector experienced mixed results. Although investors had previously shifted towards value-oriented banks, anticipating an earlier interest rate hike from the Bank of Japan, these financial stocks came under pressure on Tuesday. Both Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group declined by more than 3%.

On the Tokyo Stock Exchange's Prime Market, the selloff was broad in nature. Approximately 70% of over 1,500 listed stocks recorded a decline. Conversely, 28% advanced, while only 1% remained unchanged.