Japan's Nikkei 225 fell into a bear market on Friday as a technology sell-off spread across Asia after Wall Street's AI-driven losses. Chip-related stocks led the decline, and investors now turn to the October payrolls report.
Japan's Nikkei 225 dropped 5.96% to 57,434.77 on Friday, entering bear market territory. The tech sell-off dragged the benchmark more than 20% below its June peak.
The index had ended the previous session at 61,077.9, according to CNBC's report on Asia-Pacific futures. Futures in Osaka had signaled the slide, trading at 57,400 before the open.
Chip stocks lead the Japanese slide
Chip-related names took the heaviest losses. Advantest plunged 12.2%, while Tokyo Electron slid 7.3%. Technology investor SoftBank Group tumbled 11.6%, and memory chipmaker Kioxia Holdings fell nearly 10%.
The rout spread beyond Japan. South Korea's Kospi fell more than 6% to 5,059.69, and earlier in the session it plunged more than 8%, triggering circuit breakers that suspended trading for 20 minutes. Taiwan's Taiex also entered a bear market, dropping 4.51% to 39,701.64.
Wall Street's AI sell-off sets the tone
The Asian losses followed heavy selling in the US. The Nasdaq Composite tanked 5.5% on Thursday, closing more than 10% below its most recent high and landing in correction territory. Traders tied the AI-related losses to worries about a potential slowdown in data center construction after Democrats' wins in the House and Senate.
Nvidia dropped 9% and the Magnificent Seven shed more than $1 trillion in aggregate market cap.
Payrolls report is the next test
US stock futures were mixed early Friday. Dow futures slumped 1.3%, S&P 500 futures fell 0.35%, and Nasdaq-100 futures inched 0.3% higher.
Investors now await the October payrolls report. The Dow Jones consensus estimate is 59,000 jobs added, with the unemployment rate holding at 4.2%. The market is also pricing in about a 70% chance of a 25-basis point rate hike at the Fed's Dec. 9 meeting, according to the CME FedWatch Tool.
Source: CNBC
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