Japanese Stocks Head for Worst Day Since March
By Sherry Qin
Japanese stocks tumbled amid renewed questions about the sustainability of mounting artificial-intelligence investment as markets repriced Federal Reserve rate-hike prospects.
The benchmark Nikkei Stock Average fell as much as 5.4% on Thursday before trading 5.0% lower at 64352.76 recently, on track for its biggest daily percentage loss since March.
Semiconductor-related stocks led the losses. Memory maker Kioxia plunged 12%, chip-equipment manufacturer Tokyo Electron lost 7.3%. Chip-testing-equipment maker Advantest dived 15% and Softbank Group gave up 9.3%.
The declines came as Asian markets fell sharply, tracking Wall Street's losses overnight amid concerns about the Federal Reserve's rate-hike trajectory after a higher than expected U.S. inflation print in September, and AI stocks' elevated valuation.
With the 10-year Treasury yield pushing above 5%, the market is repricing anything that funds multiyear builds against revenue that arrives later, Yorkville Ives & Co. analyst Dan Ives said in a note.
Concerns about the sustainability of debt-funded AI infrastructure investment are becoming increasingly evident in credit markets. Shares in U.S. data-center operator CoreWeave slumped 15% after a selloff in the company's corporate bonds sent yields surging and raised concerns about its financing risks.
Other tech-heavy Asian markets also suffered, with South Korea's Kospi sliding 8.8% and Taiwan's Taiex down 3.4%.
AI and semiconductor stocks had recently traded near peak valuations, leading investors to lock in profits as the AI trade becomes increasingly volatile. Market observers expect the volatility to persist as the earnings season gets under way and major AI and semiconductor companies release results, potentially resetting investor sentiment.
"Concerns around funding the AI expansion, China's growing competitive position and entrenched inflation pressures are colliding with the bigger question of how much economic weakness a higher-for-longer policy stance could generate," Pepperstone's head of research Chris Weston said in a note.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
October 15, 2026 02:11 ET (06:11 GMT)
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