Japan’s Nikkei share average
sank by the most in more than seven months on Tuesday, as
investors sold off tech stocks following Wall Street’s sharp
decline overnight.
The index dropped 3.2% to close at 48,702.98,
posting its sharpest daily decline since April 9. The broader
Topix sank 2.9%.
Since fiscal dove Sanae Takaichi’s election as the prime
minister last month, expectations for expanded economic stimulus
have driven sharp gains in Japanese shares, with the Nikkei
touching an intraday record of 52,636.87 on November 4.
“Once the Nikkei fell below the key 50,000 level, sentiment
worsened and the sell-off accelerated,” said Seiichi Suzuki,
chief equity market analyst at Tokai Tokyo Intelligence
Laboratory.
“Some investors wanted to buy shares on a dip, but even they
waited for shares to fall further.”
U.S. stocks ended sharply lower on Monday, with the S&P 500
and the Nasdaq closing below a key technical indicator for the
first time since late April as investors braced for quarterly
results from retailers and Nvidia and awaited a
long-delayed U.S. jobs report this week.
Nvidia, the world’s largest company by market value and
which is at the heart of Wall Street’s artificial intelligence
trade, is due to report after the bell on Wednesday.
SoftBank Group fell 7.5%, while chip-related Tokyo
Electron and Advantest lost 5.5% and 3.7%,
respectively.
“Positive factors that had driven the market rally have
weakened, such as AI growth and expectations for U.S. rate
cuts,” said Naoki Fujiwara, a senior fund manager at Shinkin
Asset Management. “The worsening relationship between Japan and
China is also weighing on sentiment.”
Fibre optic cable makers, beneficiaries of AI trade, fell,
with Fujikura and Sumitomo Electric Industries
losing 9.9% and 9.1%, respectively.