Japan’s Nikkei slides into correction zone on tech selloff, Middle East conflict

TOKYO: Japan’s Nikkei tumbled into correction territory 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 sank 4.03 percent to close lower at 64,141.12, after falling as much as 6.18 percent. The index is now down 11.3 percent from its all-time high close of 72,366.34 on June 25. The broader Topix slipped 2.72 percent to 3,919.21.

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 percent overnight, while the US-listed shares of South Korean chipmaker SK Hynix plunged more than 13 percent.

With South Korea’s market closed for a holiday, selling pressure intensified on Japan’s technology market, and notably on 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.