Japan's Nikkei plunges as tech stocks hammered by AI, rate hike worries

According to Business Recorder, Japan's Nikkei share average fell nearly 5% on Thursday, with technology shares bearing the brunt. The index sank 4.8% to 64,489.06 at the midday recess, while the broader Topix lost 2.5%. Investors reacted to media reports of distressed debt at US cloud-computing provider CoreWeave and to hotter-than-expected US inflation data that raised fears of higher interest rates.

Selling was concentrated in AI-linked shares, with Advantest and Tokyo Electron down 13.9% and 7.3% respectively. SoftBank Group, which backs artificial intelligence startups, lost 9.4%. CoreWeave itself dropped more than 15% even though its chief executive told staff in an internal note that its deal backlog could cover its debt.

Pharmaceuticals were the best-performing industry group on the Tokyo exchange, climbing 3.4% as investors moved toward defensive sectors. Sumitomo Pharma led the Nikkei gainers with a 13% rise. Breadth was weak, with 145 of the 225 components falling against 80 rising. Nomura strategist Wataru Akiyama said concerns about the financial health of AI-related companies had risen quickly.