The Nikkei 225 closed down 1,915.97 points, or 2.79%, at 66,835.54 on July 16, its first drop in three days. A selloff in AI and semiconductor stocks, deepened by a plunge in South Korea’s KOSPI, drove the fall as investors squared positions ahead of TSMC’s earnings.
The Nikkei 225 fell 1,915.97 points, or 2.79%, to 66,835.54 on July 16, its first decline in three days. Heavy selling in AI and semiconductor shares overwhelmed a tailwind from overnight gains on Wall Street, and the index briefly fell more than 2,200 points, dropping below the 67,000 level.
Chip stocks lead the retreat
The rout gathered pace from the opening bell. The Nikkei started the session at 67,900.43, down 851.08 points, then accelerated lower as selling swelled in high-weight technology names. Pressure intensified further when South Korea’s KOSPI tumbled more than 7%, pushing Tokyo shares back toward their morning lows.
Semiconductor testing equipment maker Advantest was the top contributor to the decline, followed by Tokyo Electron. Advantest closed down 5.93% at 29,640 yen, while memory maker Kioxia Holdings fell 15.03% to 62,110 yen, the day’s steepest drop.
Traders wait on TSMC
Behind the selling was position-squaring ahead of the earnings announcement from TSMC, the world’s largest contract chipmaker. When the results arrived, TSMC’s second-quarter net profit rose 77% year-over-year, surpassing forecasts, and Tokyo Electron briefly narrowed its losses. Even so, the broader market’s reaction stayed limited.
The weakness came despite a firmer U.S. session. The Dow Jones Industrial Average rose 150.37 points to 52,658.64 overnight, while the Nasdaq Composite gained 162.22 points, as soft producer price data tempered expectations for Federal Reserve rate hikes.
Rotation into non-tech names
Money did not leave the market entirely. Buying rotated into pharmaceuticals, transportation equipment, and pulp and paper, while non-ferrous metals, metal products, and electrical machinery fell. Toyota Motor, Honda, and Sony Group drew buyers even as the headline index sank.
In currencies, the dollar held firm around the 162-yen level, supported by sticky crude prices and U.S. long-term rates. Japan’s Finance Minister Katayama, seeking to restrain volatility, said the government would respond to yen moves: “we will respond appropriately to foreign exchange movements at any time.”
Sources: BigGo Finance, Moomoo
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