Japan's Nikkei slumps over 4% on tech selloff, Middle East conflict

TOKYO: Japan’s Nikkei share gauge tumbled more than 4% on Friday, as a global rout in chipmakers and an escalation in the Middle East conflict prompted investors to shun risk assets.

The benchmark Nikkei 225 slid 4.4% to 63,896.48 as of the midday break, poised for its steepest decline in four months.

The broader Topix slipped 2.61% to 3,923.45. The decline followed overnight losses in US equities, where technology stocks tumbled, while US economic data showed strength and corporate earnings season was robust.

Hawkish remarks from Federal Reserve officials on Thursday reinforced expectations for further US rate hikes.

The Philadelphia SE Semiconductor index tumbled 4.3% overnight, while the US-listed shares of South Korean chipmaker SK Hynix plunged more than 13%.

With South Korea’s market closed for a holiday, selling pressure intensified on Japan’s tech market, and notably on chipmaker Kioxia Holdings, said Daisuke Hashizume, a senior strategist at Daiwa Securities.

“The long-term trend for AI and data centres is unchanged, but right now investors are worried that memory chip prices can rise sustainably,” Hashizume added.

Geopolitical tensions also remained elevated, with US President Donald Trump threatening a broader escalation in strikes on Iran.

There were 83 advancers on the Nikkei 225 against 142 decliners.

Tech and AI-related shares were the biggest laggards. Kioxia was the index’s biggest percentage loser, tumbling 16.05% for its steepest one-day decline since November 2025.

Taiyo Yuden was next, sliding 14.89%, followed by Sumco, down 14.69%.

Seven & I Holdings was among the top gainers, rising 4.38% after the company said it was in talks to buy a stake in Polish convenience store operator Zabka Group.