Nikkei 225 Slips 1.5% as Chip Stocks Lead Decline Amid US Tech Selloff
Japan's Nikkei 225 Index fell 1.5% to 42,888.55, led by declines in tech and semiconductor stocks. SoftBank Group dropped 7.10% and Advantest fell 5.70%. The tech sector weakness mirrored US market trends, with Nvidia experiencing a 3.50% decline. Concerns arose from US government's potential equity stakes in Intel. Contrastingly, Japanese automakers gained following a US-Japan trade deal reducing car import tariffs. Analysts predict the Nikkei may moderate to around 42,000 by year-end.
*this image is generated using AI for illustrative purposes only.
Japan's benchmark Nikkei 225 Index retreated for the second consecutive day, dropping 1.5% to close at 42,888.55. This decline comes on the heels of the index recently touching record highs, with semiconductor-related stocks bearing the brunt of the selloff.
Tech and Chip Stocks Under Pressure
The downturn was primarily driven by weakness in the technology sector, mirroring overnight losses in US tech stocks. Notably:
- SoftBank Group, a major player in the tech investment space, saw its shares plummet by 7.10%.
- Advantest, a leading manufacturer of chip-testing equipment, experienced a significant 5.70% decline.
These losses coincided with a 3.50% drop in Nvidia's stock price in the US market, marking its steepest single-day decline in nearly four months.
US Government's Stance on Chip Industry
Adding to the sector's woes, US Commerce Secretary Howard Lutnick announced that the government is seeking equity stakes in Intel in exchange for cash grants. This move has raised concerns about potential government intervention in the semiconductor industry, coming just days after SoftBank's $2 billion investment in Intel.
Automotive Sector Bucks the Trend
In contrast to the tech sector's struggles, Japanese automakers saw gains:
- Honda Motor shares rose by 2.00%
- Isuzu Motors added 1.70%
These positive movements are attributed to a recent US-Japan trade deal that reduces tariffs on Japanese car imports from 27.50% to 15.00%. As part of this agreement, Japan has committed to $550 billion in investments in the United States.
Market Outlook
Despite the recent surge to record highs, analysts are projecting a moderation in the Nikkei's performance. Forecasts suggest the index may ease back to around 42,000 by the end of the year, indicating a potential cooling-off period after the recent rally.
The interplay between global tech trends, government policies, and sector-specific developments continues to shape the Japanese market landscape, highlighting the interconnected nature of international financial markets.
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