Nikkei slips as chip stocks drag

Japan’s Nikkei Stock Average (JAPAN225:N) fell about 0.5% on Monday to around 62,400, extending its recent slide as semiconductor and electronics shares led the market lower. In morning trade, the Nikkei 225 was down 0.43% at 62,425.47, marking its third consecutive session of declines and leaving it on track for its lowest close since July 30.

The broader move reflected continued pressure on technology-focused names, which remain the most sensitive part of the market to shifts in risk sentiment. While the headline decline was modest, the composition of moves within the index showed pronounced weakness in chip-related stocks.

Semiconductor and electronics companies were at the center of Monday’s selling. Chip testing equipment maker Advantest (6857.T) fell 1.7%, while electronic components producer Murata Manufacturing (6981.T) slipped 1.0%. Other chip-related names also retreated, with Sumco down 4.03%, Kokusai Electric lower by 3.86% and Screen Holdings declining 3.78%.

The drop in these stocks added to recent volatility in Japan’s semiconductor segment, which has faced recurring bouts of risk aversion. Recent global market moves have highlighted investor concerns over the sustainability of AI infrastructure spending into 2027, weighing particularly on shares tied to chip production and related equipment.

Market sentiment was pressured by worries over the Iran conflict and potential impacts on energy costs, which have contributed to a cautious tone toward risk assets. These concerns have fed into fears of higher operating costs and broader inflation risks, factors that tend to hurt growth-oriented sectors such as technology.

Despite these headwinds, the foreign exchange backdrop remained relatively stable, with the dollar trading around 157 yen, little changed from Friday’s Tokyo close. This limited additional currency-driven volatility for export-focused Japanese stocks.

While the Nikkei moved lower, there were signs of sector rotation beneath the surface. Energy-linked shares advanced, benefiting from the focus on higher energy prices and helping to offset some of the drag from technology names on the headline index.

Elsewhere in the market, gains in cybersecurity and IT services companies helped limit the broader decline, even as the core semiconductor complex weakened. The Topix index reflected this divergence, rising 0.48% to 3,984.74 in morning trade, supported by strength outside the most pressured chip-related stocks.