Nikkei posts sharpest drop in about 6 weeks as chip shares slide

JAPAN’S Nikkei share average posted its steepest drop in nearly six weeks on Tuesday (Dec 5), as elevated US Treasury yields drove a heavy sell-off in Advantest and other chip-related stocks.

The benchmark Nikkei average closed down 1.37 per cent at 32,775.82 on Tuesday, its biggest single-day fall since Oct 26. The index touched a three-week low of 32,726.68 during the session.

“Investors unwound high-technology stocks in today’s session. Those shares had been bought amid declines of US yields,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

“The overnight rise on the US Treasury yields became a cue for a sell-off. Investors were watching for how much the yields would rise.”

US stocks ended lower on Monday, with megacaps Microsoft, Apple, Nvidia and Amazon dipping over 1 per cent, pressured by higher U 10-year yields ahead of key employment data due this week.

Most of the Nikkei’s top losers were chip-related stocks, with Advantest down 6 per cent, Tokyo Electron falling 3.8 per cent and Screen Holdings slipping 5 per cent. Renesas Electronics also fell 5 per cent.

The broader Topix fell 0.82 per cent to 2,343.16.

A smaller decline of the Topix than the Nikkei’s loss was a reflection of a real market condition, said Fujiwara at Shinkin Asset.

Cloud service provider Sakura Internet surged 13 per cent after Nvidia CEO Jensen Huang said the US semiconductor giant would work with Japanese companies such as Sakura Internet to build artificial intelligence factories for Japan.

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“The desire to create Japan’s large language model is very real and the Prime Minister is very urgent,” Huang said after his meeting with Japanese Prime Minister Fumio Kishida on Monday.

Robot maker ACSL surged 6 per cent after an activist investor Oasis Management revealed its holding of a 10.47 per cent stake in the company. REUTERS