Japan’s Nikkei experienced a decline on Tuesday, driven by a selloff in AI-related stocks that intensified following a downturn in US chip shares. Additionally, geopolitical tensions contributed to a further erosion of risk sentiment. The benchmark Nikkei 225 declined by 1.82%, closing at 67,777.52, marking a fourth consecutive session of losses. The broader Topix experienced an increase of 0.14%, reaching a level of 4,110.67.
Weakness in semiconductor stocks exerted significant pressure on the Nikkei, following a 1.2% decline in the Philadelphia Semiconductor Index overnight. Japan’s inflation dynamics continued to attract attention, as the Bank of Japan disclosed that wholesale inflation reached 6.8% year-on-year in September. Concurrently, uncertainty surrounding the US Federal Reserve’s forthcoming policy decisions, along with geopolitical tensions in the Middle East and Ukraine, contributed to a cautious sentiment among investors.
Concerns are escalating regarding the potential returns on substantial investments in AI hyperscalers, as noted by Maki Sawada, an equities strategist at Nomura Securities. Additionally, the influence of global hotspots on energy prices is tempering optimism. “It’s fair to say that today’s Japanese stock market is being affected by the downward trend in US semiconductor-related shares,” Sawada said. “Concerns have grown regarding the attack on the Saudi Arabian airport and the feasibility of the ceasefire agreement between Russia and Ukraine.”
Among the Topix industry groups, marine transport shares led the gainers, increasing by 3.35%. Nonferrous metals were the weakest performers, declining by 4.79%. In the Nikkei 225, 156 stocks advanced while 68 declined. The largest losers were Kioxia Holdings, down 13.28%, followed by Kokusai Electric, trading 9.53% lower, and Sumco, which lost 8.64%. The largest percentage gainers were Pan Pacific International, which increased by 4.01%, followed by Sumitomo Heavy Industries, up 3.79%, and Kawasaki Kisen Kaisha, which saw a rise of 3.53%.
