Japan's Nikkei index fell as much as 2% during the session, trading 1.8% lower at 85,108.28 by 0133 GMT, as tech stocks faced heavy selling pressure. Despite the headline decline, market breadth remained positive, with 152 of the index's 225 constituents advancing.
The broader Topix index showed resilience, slipping only 0.4%, supported by strength in non-technology sectors. Semiconductor and AI-related stocks were hit hard following overnight losses in AMD and concerns over SpaceX's spending on AI infrastructure. SoftBank Group, a major AI investor, fell 6.6%, while Tokyo Electron and Advantest also saw significant declines.
Analysts noted that the sharp fall in the Nikkei overstated the overall market weakness due to the heavy weighting of semiconductor stocks. Lower oil prices improved the outlook for sectors benefiting from reduced energy costs, supporting broader investor sentiment.
The food sector was the top performer on the Tokyo Stock Exchange, with the Topix Foods Index climbing 2.3%. Kikkoman surged over 12% after reporting strong earnings. Healthcare equipment manufacturer OMRON rallied 15%, and Tokai Carbon advanced more than 14% due to company-specific developments.
Investors are awaiting SoftBank Group's earnings, scheduled after the market close. Meanwhile, Nintendo rose 1.3%, bucking the broader market weakness. The mixed market performance was attributed to the divergence between technology stocks and the broader market, where falling oil prices lent support to several sectors.
Background
The Nikkei's decline highlights the volatility in technology stocks, which have been under pressure due to concerns over high spending in AI infrastructure. This comes amid a global market environment where investors are closely watching tech sector performance.
Looking ahead, investors will closely monitor upcoming earnings reports and global market trends. The focus will remain on how technology stocks perform amid ongoing concerns over AI infrastructure spending.
