Japan's benchmark Nikkei 225 fell nearly 2% on Thursday, dragged lower by sharp losses in heavyweight technology stocks after weakness in U.S. chipmakers spilt over into Asian markets. According to Reuters, the decline in tech shares outweighed gains across a majority of stocks, which were supported by lower crude oil prices amid hopes of a Middle East peace deal.
The Nikkei dropped as much as 2% during the session and was trading 1.8% lower at 85,108.28 by 0133 GMT. Despite the headline decline, market breadth remained positive, with 152 of the index's 225 constituents advancing, while 71 stocks declined and two remained unchanged.
The broader Topix index was relatively resilient, slipping only 0.4%, reflecting strength in several non-technology sectors.
Semiconductor and artificial intelligence-related stocks came under heavy pressure after overnight losses in chipmaker AMD, and SpaceX renewed investor concerns over elevated spending on artificial intelligence infrastructure.
Among the biggest laggards, SoftBank Group, a major investor in AI-focused startups, fell 6.6%. Chip equipment maker Tokyo Electron declined 6.3%, while semiconductor testing equipment manufacturer Advantest lost 4.2%.
Analysts said the sharp fall in the Nikkei overstated the weakness in the overall market because of the heavy weighting of semiconductor stocks in the benchmark index. Lower oil prices also helped support broader investor sentiment by improving the outlook for sectors that benefit from reduced energy costs.
The food sector emerged as the top-performing industry group on the Tokyo Stock Exchange, with the Topix Foods Index climbing 2.3%. Kikkoman surged more than 12% after reporting stronger-than-expected earnings.
Several other stocks also posted strong gains. Healthcare equipment manufacturer OMRON rallied 15%, while Tokai Carbon advanced more than 14% following company-specific developments.
Investors are also awaiting earnings from SoftBank Group, scheduled after the market close. Meanwhile, Nintendo bucked the broader weakness, rising 1.3% during the session. Reuters attributed the mixed market performance to the divergence between technology stocks and the broader market, where falling oil prices continued to lend support to several sectors.
