Japan's Nikkei share average closed nearly 3% lower on Thursday as chip-related stocks sold off and an escalating Middle East conflict hurt risk appetite, overshadowing record earnings and a stellar outlook from Taiwan Semiconductor Manufacturing Co.
The Nikkei .N225 ended 2.8% lower at 66,835.54 after falling as much as 3.3% earlier in the day, while the broader Topix .TOPX slid 1.5% to 4,028.79. Market breadth was negative, with 139 decliners on the Nikkei 225 against 85 advancers and one unchanged.
"There has recently been a noticeable divergence between semiconductor stocks and the broader market, and today is no exception, with high-tech shares undergoing a correction," said Hiroki Takei, a strategist at Resona Holdings.
TSMC beats forecasts, but investors remain cautious
Taiwan Semiconductor Manufacturing (TSMC) 2330.TW posted a record second-quarter net profit that jumped 77% and beat market forecasts, as surging global demand for AI processors boosted earnings.
The world's main producer of advanced AI chips also raised its full-year revenue growth forecast in U.S. dollar terms to slightly above 40% from more than 30% previously. It said capital expenditure in the next three years would be significantly higher than in the previous three.
Even so, investors stayed cautious. Memory chipmaker Kioxia 285A.T was the Nikkei's biggest loser with a 15% plunge.
SoftBank Group 9984.T, a tech investment conglomerate, slumped 6.3%, while chip-testing equipment maker Advantest 6857.T shed 5.9%.
Takei said recent volatility in high-tech shares appeared to be driven more by supply-demand factors than by fundamentals, pointing to a sharp fall in South Korean shares linked to issues around leveraged ETFs and elevated margin buying by individual investors in Japan in recent weeks.
Middle East conflict pressures sentiment; Nichirei rises after cyberattack halt ends
Broader sentiment was also pressured by the Middle East conflict after the U.S. launched two waves of attacks on Iran's coastal defences and missile sites on Wednesday and Iran struck back by targeting U.S. military sites in neighbouring countries.
Oil prices fell as traders assessed the risks from the renewed clashes. O/R
Meanwhile, Nichirei 2871.T shares jumped as much as 7.7% after the frozen-foods and cold-chain logistics firm said it would resume frozen-food shipments and refrigerated warehouse operations halted due to cyberattacks.
SMH•
