Japan shares fall as Asian stocks slide after US tech rout, bonds rally

Asian stock markets continued their decline, mirroring losses on Wall Street as investors moved away from technology giants following a sharp rally earlier in the year and sought refuge in treasuries and currencies like the yen. MSCI's regional equities benchmark slipped 0.3%, hovering near levels last observed in July. Taiwan's exchange was set to close on Friday due to a typhoon.

Sentiment remained weak, with the Nasdaq 100 Index contracts down 0.3% in early Asian trading. Among notable movements, S&P 500 futures were unchanged, Hang Seng futures rose 0.8%, Japan's Topix fell 0.4%, and Australia's S&P/ASX 200 dropped 0.3%. Earlier, the Nasdaq 100 tumbled 2.9%, and the Philadelphia Semiconductor Index sank 6.7%, their steepest declines since late June.

Tech stocks faced pressure, with Tesla and Meta Platforms among the megacaps hit hard after their earnings. Investors shifted towards defensive dividend-paying stocks and utilities instead of abandoning the market entirely. The bond market saw a significant rally, with the 10-year yield falling 17 basis points to 4.95%, indicating a strong shift towards safety.

The yen strengthened against other major currencies, while crude oil held steady around US$113.10 per barrel, benefiting from heightened concerns over potential supply disruptions following attacks in Saudi Arabia. Investors are cautious about the sustainability of AI investments and their future returns, which are starting to impact the broader economic outlook.