By Kevin Buckland
TOKYO, – Japan’s Nikkei share average sank on Friday, as tech stocks tracked Wall Street peers’ overnight losses amid mounting concerns over sky-high valuations.
The Nikkei fell as much as 2% early in the session, but recovered slightly to trade 1.3% lower at 50,630.91 once the initial round of selling subsided. The broader Topix lost 0.7% to 3,358.51.
Artificial intelligence-linked firms led the drop, with chip-testing equipment maker Advantest falling 3.5%, startup investor SoftBank Group dipping 4.2% and chip-making tool manufacturer Tokyo Electron shedding 4%.
Stocks linked to data centre expansion also retreated, with Hitachi and Fujikura down 4.3% and 4.7%, respectively.
“It looks like investors are taking profits on these AI-related stocks,” as worries about stretched valuations simmer, said Nomura Securities strategist Fumika Shimizu.
Instead, “we are seeing a bit of sector rotation,” particularly into companies that have posted strong earnings this season, she added.
Paper company TOPPAN Holdings jumped 9.7% and property developer Tokyo Tatemono climbed 7.5% on robust financial results to be Nikkei’s two biggest percentage gainers.
Japan’s megabanks, including Mizuho Financial Group , Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are set to report their results later in the day. All three stocks traded slightly higher.
The majority of the Nikkei’s 225 components gained, with 135 advancers versus 87 decliners. Three traded flat.
The Nikkei has gained 0.8% this week, buoyed by Monday’s 1.3% rally that helped the index retrace part of last week’s more than 4% slide driven by worries about tech share valuations.
A flashpoint could come next week, with AI bellwether Nvidia reports its earnings on Wednesday.
This article was generated from an automated news agency feed without modifications to text.