Japanese equities extended losses following a weak session on Wall Street, dragged down by a sharp correction in artificial intelligence and semiconductor-related shares, alongside mounting macroeconomic headwinds from rising crude oil prices and domestic rate expectations.
Key Market Drivers & Highlights
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Tech Sector Selloff: Semiconductor and AI-linked heavyweights led the downward trend following weak overnight cues from US markets, where investors grew increasingly cautious over the valuations and sustainability of high-flying tech stocks.
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Inflationary Pressures from Oil: A notable jump in crude oil prices compounded global inflationary concerns, raising the prospect of further monetary tightening by major central banks.
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Bank of Japan Policy Focus: Bank of Japan (BOJ) Governor Kazuo Ueda noted that underlying inflation is moving “quite close” to the central bank’s 2% target, keeping investor attention firmly fixed on potential upcoming interest rate hikes and borrowing cost adjustments.
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Index Performance: The benchmark Nikkei 225 dropped over 2% in early trading, weighed down by steep losses in electronics components and chip-testing equipment makers, while select value and defensive counters attempted to provide a cushion.
