Japan's Nikkei slides as AI stocks tumble, geopolitical risks weigh

Tokyo's Nikkei slid on Tuesday as a selloff in AI-related stocks accelerated following the weakness in US chip shares, while geopolitical tensions further eroded risk appetite. The benchmark Nikkei 225 index fell 2.64% to 67,206.79 in early trade, on track for a fourth straight day of decline. The broader Topix fell 0.56% to 4,081.76.

Wall Street's tech-heavy Nasdaq dropped 0.44% overnight as chip stocks retreated. Investors remained cautious amid concerns over the next move by the US Federal Reserve and geopolitical risks in the Middle East and Ukraine. Japan's wholesale prices rose 6.8% year-on-year in September, while yen-based import prices surged 24.5%. Maki Sawada, an equities strategist at Nomura Securities, noted mounting doubts about whether massive investments in AI hyperscalers will yield results.

The global hotspots are also dampening optimism over energy prices. Sawada explained that today's Japanese stock market is being influenced by the downward trend in US semiconductor-related shares. Concerns have grown over the attack on the Saudi Arabian airport and the feasibility of the ceasefire agreement between Russia and Ukraine.

Within the Topix groups, marine transportation shares were the top gainers, rising 3.35%, while nonferrous metals led the decliners, down 4.79%. The Nikkei 225 showed 129 advancers against 96 decliners. Kioxia Holdings saw the largest decline, dropping 13.02%, followed by Taiyo Yuden, which fell 9.34%, and Kokusai Electric, which lost 9.19%.

The biggest gainers in the index were Kawasaki Kisen Kaisha, up 4.07%, Mitsui O.S.K. Lines, up 3.81%, and Pan Pacific International, which rose 3.36%.