Japan's Nikkei slumps 5% as tech stocks hammered by AI, rate hike worries
EWJ•Japan's Nikkei fell 4.9% to 64,425.95 on Thursday, while the Topix lost 2.4%, as AI-linked stocks slid and hotter-than-expected U.S. inflation fueled rate hike worries.
1. Tech stocks lead declines
The tech-heavy Nikkei ended down 4.9%, with chip equipment makers Advantest and Tokyo Electron falling 15% and 7.8%, respectively, and SoftBank Group dropping 9.3%. Selling was concentrated in AI-linked stocks, while TSMC's record earnings late in the Tokyo session failed to support the market.
2. Rate and AI concerns
Hotter-than-expected U.S. inflation figures stoked bets that the Federal Reserve may raise rates earlier and keep them elevated longer. CoreWeave fell more than 15% after media reports about distressed debt, despite its CEO telling employees that the company's deal backlog was large enough to cover its debt obligations. Nomura strategist Wataru Akiyama said concerns about the financial health of AI-related companies had risen, along with worries about AI capital spending and profitability.
3. Pharmaceuticals gain
Pharmaceuticals climbed 4% as investors rotated into the defensive sector. Sumitomo Pharma rose 15.8%, the largest percentage gain among Nikkei components; 136 components fell, 87 rose and two were unchanged.
