Japan: Nikkei Sheds Over 5% in Global Technology Rout

Synopsis

Stocks across Asia pulled back and Japan's Nikkei 225 declined by over 5 per cent Friday, as investors turned selling on technology. The slide was driven by Wall Street's biggest decline since April 2025, due to worry about spending on AI. The Kospi and the Taiex of South Korea and Taiwan respectively declined by bigger amounts on a day-to-day basis. The Sensex and Nifty in India have seen an increase in their values, buoyed by foreign investment. The Nikkei figures in the reports differed slightly, as shown below.

The Nikkei 225 on the Japan Exchange Group index fell 5.3 per cent. Other reports cited a drop of over 5 per cent, which was part of a regional decline. These are comparable to the figures that you've recorded in your notes: approximately 5 per cent.

The cause

The downbeat performance in Wall Street has been fuelled by concerns over spending on AI technology and new regulations following last November's US mid-term elections. The Asian markets, where a considerable part of the technology supply chain is based, were open under pressure.

The Kospi in South Korea tumbled by over 8 per cent in the first half of the day, while the Taiwan stock exchange index dropped by more than 8 per cent, only to reclaim 3.2 per cent in the closing part of the trading session.

The India contrast

Indian stocks traded in the opposite direction. Foreign institutional investors bought ₹14,974.68 crore worth of equities on Thursday as the Sensex rose 2.60 per cent and the Nifty 2.40 per cent. Analysts quoted by one outlet said the slowdown in the AI trade “will turn out to be beneficial for India.

Similar declines have been seen in the Nikkei. It tumbled 3.9 per cent on June 8 on a day when the AI-related share prices led the decline.

Why it matters

Foreign investors own a substantial amount of Japanese shares and significant declines in the Japanese stock market can ripple through to bond markets and fund flows, among other areas. The question is, is this the short-term repricing or is there a long-term reassessment of technology spending plans?

US trading will be monitored for confirmation, technology earnings and any remarks on data centre investments will be watched in the markets.