Japan’s benchmark Nikkei 225 suffered one of its heaviest sell-offs of the year on Thursday, tumbling 4.9% as concerns over debt-funded artificial intelligence spending and a hotter-than-expected US inflation reading sent investors fleeing chip-related shares, Reuters reported. The index closed at 64,425.95, down 3,318.34 points, while the broader Topix fell about 2.4% to 3,999.34, slipping below the 4,000 mark.
According to News On Japan, the point loss ranks as the third-largest in the Nikkei’s history. The index touched an intraday low of around 64,093 and has now fallen for six consecutive sessions, losing more than 6,000 points since it stood above 70,000 on October 6.
Chip heavyweights lead the rout
Chip-testing equipment maker Advantest was the biggest drag, ending nearly 15% lower and on its own wiping more than 1,300 points off the index, News On Japan said. Investing.com’s close-of-trade data showed Advantest down 14.96%, with silicon wafer maker SUMCO off 13.85% and Lasertec down 13.56%. Tokyo Electron, Kioxia and SoftBank Group also fell sharply; at the midday break Reuters had SoftBank Group down 9.4% and Tokyo Electron down 7.3%.
Defensive names offered the only shelter. Sumitomo Pharma jumped nearly 16%, Ryohin Keikaku rose more than 9% to a record high and Takeda gained about 5%, as money rotated into pharmaceuticals and consumer stocks. Decliners still far outnumbered advancers across the Tokyo market.
AI financing jitters and Fed hike bets
The sell-off followed a steep overnight slide on Wall Street, where the Nasdaq dropped 1.9% and the Philadelphia Semiconductor Index lost about 4.3%. Reuters linked the move to reports of distressed debt at US AI cloud provider CoreWeave, whose shares fell more than 15%, reviving doubts over how the AI infrastructure boom is being financed.
Nomura strategist Wataru Akiyama told Reuters that worries about the financial health of AI-related companies had spread, and that concerns over AI capital spending and profitability “have risen rapidly.”
Adding to the pressure, US consumer prices rose 3.7% year on year in September, above expectations, strengthening bets that the Federal Reserve could raise interest rates sooner and keep them elevated for longer. The sell-off was regional: South Korea’s Kospi plunged more than 7%, triggering a temporary trading curb, with Samsung Electronics and SK Hynix among the hardest hit.
The yen hovered around 158 to the dollar during the session, while Taiwan’s TSMC reported better-than-expected third-quarter profit on Thursday, though the result failed to halt the slide in Japanese chip stocks.
What’s next
Investors will be watching whether bargain hunters return to the battered chip heavyweights and whether stress in US AI credit markets deepens. Further US inflation data and Fed commentary ahead of the central bank’s October 27-28 meeting are also in focus, as is the Bank of Japan’s policy meeting at the end of the month, where the weak yen and energy costs are expected to feature in the rate debate.
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