Japan's Nikkei slides into correction zone on tech selloff, Middle East conflict

The decline followed overnight losses in U.S. equities, where technology stocks tumbled, while U.S. economic data showed strength and corporate earnings season was robust. Hawkish remarks from Federal Reserve officials on Thursday reinforced expectations for further U.S. rate hikes.

The Philadelphia SE Semiconductor index .SOX tumbled 4.3% overnight, while the U.S.-listed shares of South Korean chipmaker SK Hynix SKYH.O plunged more than 13%.

With South Korea's market closed for a holiday, selling pressure intensified on Japan's technology market, and notably on Kioxia Holdings 285A.T, said Daisuke Hashizume, a senior strategist at Daiwa Securities.

"The long-term trend for AI and data centres is unchanged, but right now investors are worried that memory chip prices can rise sustainably," Hashizume added.