Nikkei slides to one-week low as profit-taking hits tech stocks

[TOKYO] Japan’s Nikkei share average fell to a one-week low on Tuesday (Jun 23), retreating after a strong rally that had driven the index to successive record highs, prompting investors to lock in profits.

The Nikkei dropped 3.6 per cent to 69,788.38, hitting a one-week low and closing below the 70,000 mark for the first time since last Wednesday.

The broader Topix slipped 2.6 per cent to 3,990.38.

The pullback follows a powerful rally driven by sustained buying in AI and semiconductor stocks, which pushed the Nikkei past 72,000 for the first time on Monday, just two sessions after it breached 71,000.

“After a string of gains, the market appears to be seeing some mild profit-taking,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Market breadth remained weak,with 184 decliners in the Nikkei 225 against 41 advancers.

AI-related shares, which have powered the market’s recent surge, led losses ahead of Micron Technology’s earnings announcement.

Memory chipmaker Kioxia slumped 15.1 per cent while tech investment giant SoftBank Group sank 10.1 per cent. Shares of cable and optical fibre maker Fujikura climbed 5.3 per cent.

Among other notable losers, cable and components maker Furukawa Electric fell 15.5 per cent, while non-ferrous metals producer Mitsui Kinzoku lost 12.6 per cent.

SEE ALSO

S&P 500, Nasdaq close lower, dragged by Alphabet and megacap tech; focus on Iran

European shares close higher on US-Iran talks; UK’s Starmer resigns

Defensive names saw some gains, with dairy and confectionery maker Meiji Holdings rising 3.5 per cent and logistics company Nichirei adding 3.1 per cent.

Technical indicators had signalled overheating, with the Nikkei’s 14-day relative strength index at 73 on Monday, above the 70 level that suggests overbought conditions, before easing to 61.1 on Tuesday.

“The market had already been looking overheated for quite a while as richly valued names kept rising, so it would not have been surprising to see a correction at any time,” Ichikawa said. “Today, the selling appeared to pile up.” REUTERS