Japan’s Nikkei share gauge experienced a decline for the second consecutive day on Wednesday, influenced by apprehensions regarding possible interest rate increases by the Federal Reserve and the valuations within the AI sector that dampened market sentiment. The benchmark Nikkei 225 slid 0.88% to close at 69,174.97, retreating further from a record high reached on Monday. The broader Topix slipped 0.67% to 3,963.76.

The decline followed overnight losses in U.S. equities, where the Philadelphia Semiconductor Index sank 7.9% amid worries about debt-funded AI spending and tighter financial conditions. Analysts noted that speculation regarding the Federal Reserve’s potential interest rate hikes has intensified worries about increasing financing costs for AI capital expenditures, seemingly contributing to the accelerated decline in semiconductor stocks. On the Nikkei, there were 91 advancers, 131 decliners, and three unchanged.

Chip-related shares exhibited underperformance, as Tokyo Electron experienced a decline of 4.19% and Disco recorded a loss of 3.78%. Insurance stocks experienced a notable decline, with T&D Holdings 8795 at the forefront, registering a drop of 5.74%. On the upside, retail shares exhibited a general increase, with J. Front Retailing 3086 experiencing a notable surge of 3.99%.