Japan’s Nikkei tumbles over 3% as chip stock selloff deepens after Wall Street decline

The Nikkei share average experienced a substantial decline of over 3% on Tuesday, primarily due to significant losses in chip-related stocks following a decline in their U.S. counterparts the previous evening. As of 0034 GMT, the Nikkei stood at 62,599.14, while the broader Topix index decreased by 2.44% to 3,966.87. According to Daisuke Hashizume, a senior strategist at Daiwa Securities, this is not indicative of a general market sell-off or a risk-averse sentiment among investors.

Instead, they are exercising caution before the earnings announcements of major tech firms in both the U.S. and Japan, acknowledging the uncertainties prevailing in the market.

Nvidia's stock witnessed a further drop of 4.9% overnight, contributing to the broader semiconductor index's selloff, which extended its recent decline by 2.2%. The index has experienced a notable downturn, falling 21% from its record-high close on June 22, though it has recovered by 63% in 2026. South Korea's KOSPI benchmark index also experienced a steep decline of 7% during early trading on Tuesday.

The Nikkei's downward trend has been predominantly driven by the performance of tech-heavy indices, such as the KOSPI and the U.S. Philadelphia semiconductor index. Notably, chip-related stocks like Advantest and Tokyo Electron saw steep declines of 7.52% and 8.84%, respectively. Additionally, bank shares, which had been on an upward trajectory anticipating an early interest rate hike by the Bank of Japan, also experienced a decline, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group shedding nearly 3% each.

Of the more than 1,500 stocks traded on the Tokyo Stock Exchange's prime market, 31% reported gains, 64% sustained losses, and 3% remained unchanged.