Japanese stocks traded lower after a sharp drop in U.S. semiconductor stocks and disappointment over Kioxia's earnings outlook, with the Nikkei Average down 0.7% and TOPIX also down approximately 0.8%.
Japanese stocks traded weakly against a backdrop of a sharp drop in U.S. semiconductor stocks and disappointment over the earnings of domestic technology companies. As of 9:08 a.m. on the 2nd, the Nikkei Average was down 0.7% from the previous trading day, while TOPIX was also down approximately 0.8%. The decline was led by semiconductor materials and component companies Ibiden and SUMCO.
The sell-off began in the U.S. market, where earnings from major technology companies on the 30th of last month fell short of market expectations, sending the Philadelphia Semiconductor Index down 7.2%. Intel suffered its largest one-day share price decline in more than 40 years, and the fallout spread to Asian markets. In Japan, Kioxia's earnings outlook further weakened investor sentiment, with its ADR plunging 17%.
Kioxia forecast operating profit of ¥2 trillion for the current quarter, well below market expectations, while some also pointed to the possibility that the upward trend in memory prices could stall from the immediately preceding quarter. Experts suggest that selling pressure on AI and semiconductor stocks could persist. The Nikkei 225 has fallen approximately 13% from its June high, while Kioxia and Taiyo Yuden shares have dropped more than 50%.
Market participants cite the profitability of AI investment and the outcome of the U.S. midterm elections as factors that could determine the market's direction. The bargaining power of semiconductor-related companies on pricing and the extent to which large-scale capital investment generates returns are also expected to influence a rebound in technology stocks. The decline has also spread across the South Korean market, which is showing a similar pattern.