Japan's Nikkei plunges as tech stocks are hammered by AI and rate hike worries
EWJ•Japan’s Nikkei fell 4.8% to 64,489.06 at Thursday’s midday recess, while the Topix dropped 2.5%. AI-linked stocks slid after reports of distressed debt at CoreWeave and hotter-than-expected U.S. inflation fueled concerns about interest rates.
1. Tech stocks lead declines
The tech-heavy Nikkei fell 4.8% to 64,489.06 at the midday recess, and the broader Topix lost 2.5%. Advantest fell 13.9%, Tokyo Electron dropped 7.3% and SoftBank Group slid 9.4%.
2. Debt and rate concerns
Selling followed media reports about distressed debt at U.S. cloud-computing provider CoreWeave and hotter-than-expected U.S. inflation figures. CoreWeave fell more than 15%, even after its CEO said in an employee memo that its deal backlog was large enough to cover its debt obligations. Nomura strategist Wataru Akiyama said concerns had risen about the financial health of AI-related companies, AI capital expenditure and the profitability of AI businesses.
3. Pharmaceuticals gain
Pharmaceuticals climbed 3.4% as investors rotated into the defensive sector. Sumitomo Pharma rose 13%, the Nikkei’s biggest percentage gainer; 145 of the index’s 225 components fell, while 80 rose.
