Nikkei falls more than 4 percent amid weak US manufacturing data, weaker chip sector

(MENAFN) On Wednesday, Japan's Nikkei index experienced a significant decline, falling by more than 4 percent by the end of the trading session. The index closed at 37,047.61 points, marking its lowest finish since August 15 and representing the largest drop since August 5. The broader Topix index also fell, decreasing by 3.65 percent to 2,633.49 points. This sharp downturn was largely driven by a retreat in chip-related companies, which were hit hard by the poor performance of artificial intelligence stock Nvidia and renewed concerns over a potential slowdown in the U.S. economy.

The drop in the Nikkei index was a reaction to the recent recovery from previous losses, with market participants now expressing caution regarding the state of the U.S. economy. Tomochika Kitaoka, chief equity strategist at Nomura Securities, noted that the market's apprehension will likely persist until the release of the non-farm payrolls data scheduled for Friday. The Nikkei had previously plunged more than 12 percent on August 5 due to fears of a U.S. recession and a sharp rise in the yen, marking its biggest decline since Black Monday.

In the wake of Wall Street's sharp drop on Tuesday, triggered by Nvidia's 10 percent fall as enthusiasm for artificial intelligence waned, Japanese chip giants also suffered. Companies like Tokyo Electron and Advantest saw their stock prices fall by 8.55 percent and 7.74 percent, respectively. The impact of weak manufacturing data from the U.S. Institute for Supply Management further exacerbated the market downturn. Of the 225 companies listed on the Nikkei, 214 saw declines while only 11 rose, reflecting widespread market weakness. 

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