Japanese Stocks Slump 4.9%, Marking Worst Day Since March - Update
By Sherry Qin and Ron Harui
Japanese stocks tumbled amid renewed questions about the sustainability of massive artificial-intelligence investments as markets repriced Federal Reserve interest-rate-hike prospects.
The benchmark Nikkei Stock Average closed 4.9% lower at 64425.95 on Thursday, its biggest daily percentage loss since March, FactSet data showed.
Semiconductor-related stocks led the losses. Chip-testing-equipment maker Advantest plunged 15%, research & development-oriented fab-lite company Lasertec dived 14%, and chip equipment maker Kokusai Electric slipped 13%.
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 7.6% 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; Ron Harui at ronnie.harui@wsj.com
(END) Dow Jones Newswires
October 15, 2026 03:07 ET (07:07 GMT)
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