Japan’s Nikkei share average experienced a significant decline of nearly 5 percent on Thursday, as technology stocks were adversely affected by media reports concerning distressed debt at the US cloud-computing provider CoreWeave. Additionally, concerning inflation figures from the US raised apprehensions regarding the potential for increased interest rates. The tech-heavy Nikkei concluded the trading session with a decline of 4.9 percent, closing at 64,425.95. The broader Topix experienced a decline of 2.4 percent.
Selling activity was predominantly focused on stocks associated with artificial intelligence, as evidenced by the declines of chip equipment manufacturers Advantest and Tokyo Electron, which fell by 15 percent and 7.8 percent, respectively. AI-focused startup investor SoftBank Group experienced a decline of 9.3 percent. The market failed to draw any support from Taiwanese chipmaker TSMC. Record earnings were reported, which emerged late in the Tokyo session. Overnight, a hotter-than-expected US CPI reading fuelled speculation that the Federal Reserve will be compelled to raise rates sooner and maintain them at elevated levels for an extended period, adversely affecting the highly leveraged tech sector.
The US Nasdaq Composite. IXIC slumped 1.9 percent on Wednesday. CoreWeave experienced a decline exceeding 15 percent, despite the CEO’s assurance in an employee memo that the company’s deal backlog is sufficient to meet its debt obligations. “Concerns have been raised that the financial health of AI-related companies may be deteriorating,” said Nomura strategist Wataru Akiyama. “Consequently, concerns regarding AI capital expenditure and the profitability of the AI business have risen rapidly.”
A standout winner on the day was pharmaceuticals, which emerged as the best-performing industry group on the Tokyo exchange, climbing 4 percent as investors rotated into the traditionally defensive sector. Sumitomo Pharma emerged as the leading percentage gainer on the Nikkei, recording an increase of 15.8 percent. Among the 225 components of the Nikkei, 136 experienced declines, while 87 saw increases, and two remained unchanged.
