Japan's Nikkei slides into correction zone on tech selloff, Middle East conflict

Zabka SA

17/07/2026 08:12

Updates with closing prices, details, and adds analyst comment in paragraph 11
By Rocky Swift and Junko Fujita

    TOKYO, July 17 (Reuters) - Japan's Nikkei tumbled into correction territory on Friday, as a global rout in chipmakers and an escalation in the Middle East conflict prompted investors to shun risk assets.
The benchmark Nikkei 225 .N225 sank 4.03% to close lower at 64,141.12, after falling as much as 6.18%. The index is now down 11.3% from its all-time high close of 72,366.34 on June 25. The broader Topix .TOPX slipped 2.72% to 3,919.21. 
The decline followed overnight losses in U.S. equities, where technology stocks tumbled, while U.S. economic data showed strength and corporate earnings season was robust. Hawkish remarks from Federal Reserve officials on Thursday reinforced expectations for further U.S. rate hikes. 
The Philadelphia SE Semiconductor index .SOX tumbled 4.3% overnight, while the U.S.-listed shares of South Korean chipmaker SK Hynix SKYH.O plunged more than 13%.
With South Korea's market closed for a holiday, selling pressure intensified on Japan's technology market, and notably on Kioxia Holdings 285A.T, said Daisuke Hashizume, a senior strategist at Daiwa Securities.
     "The long-term trend for AI and data centres is unchanged, but right now investors are worried that memory chip prices can rise sustainably," Hashizume added.
Geopolitical tensions also remained elevated, with U.S. President Donald Trump threatening a broader escalation in strikes on Iran.
Breadth was overwhelmingly negative, with 71 advancers in the Nikkei 225 against 152 decliners and two unchanged. 
Kioxia was the index's biggest percentage loser, tumbling 16.1% for its steepest one-day decline since November 2025. It was followed by Sumco 3436.T, down 15.17%, and Screen Holdings 7735.T, which lost 12.04%. 
AI euphoria in Japan is encapsulated in the fortunes of Kioxia, a once-struggling chipmaker whose market capitalisation briefly surpassed that of Toyota last month. But its share price has fallen more than 50% since then.
"I believe the market correction is dragging on as a reaction to the sharp rise that preceded it," said Shoichi Arisawa of Iwai Cosmo Securities. "That said, I don't think the business environment surrounding AI and semiconductor companies, or the current outlook for semiconductor demand, has changed."
     Seven & I Holdings 3382.T was among the top gainers in the Nikkei, rising 3.64% after the company said it was in talks to buy a stake in Polish convenience store operator Zabka Group ZAB.WA. 


 (Reporting by Rocky Swift, Junko Fujita, Norihiko Hirata in Tokyo; Editing by Harikrishnan Nair and Sherry Jacob-Phillips)
 ((rocky.swift@thomsonreuters.com;))