Japan's Nikkei slides as AI stocks tumble, geopolitical risks weigh

TOKYO: Japan’s Nikkei slid on Tuesday as a selloff in AI-related stocks gathered pace after weakness in US chip shares, while geopolitical tensions further dampened risk sentiment.

The benchmark Nikkei 225 fell 2.64% to 67,206.79 in early trade, poised for a fourth consecutive session of decline.

The broader Topix slipped 0.56% to 4,081.76. Wall Street’s tech-heavy Nasdaq dropped 0.44% overnight as chip stocks retreated, while concerns over the US Federal Reserve’s next policy move and geopolitical risks in the Middle East and Ukraine kept investors cautious.

Data on Tuesday showed Japan’s wholesale prices in September rose 6.8% year-on-year, while yen-based import prices surged 24.5%.

Concerns are mounting about whether massive investments in AI hyperscalers will pay off, said Maki Sawada, an equities strategist at Nomura Securities, while the effects of global hotspots on energy prices are also keeping a lid on 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 Topix industry groups, marine transportation shares topped gainers, rising 3.35%.

Nonferrous metals led the laggards, down 4.79%.

There were 129 advancers in the Nikkei 225 against 96 decliners.

The largest losers were Kioxia Holdings, down 13.02%, followed by Taiyo Yuden, 9.34% lower, and Kokusai Electric, which lost 9.19%.

The largest percentage gainers in the index were Kawasaki Kisen Kaisha, up 4.07%, followed by Mitsui O.S.K. Lines , trading 3.81% higher and on track for a record-high close, and Pan Pacific International, which gained 3.36%.