TOKYO - Tokyo stocks plunged on July 17 as a global selloff in semiconductor and artificial intelligence-related shares pushed the Nikkei 225 into correction territory, while Middle East tensions, higher oil prices and persistent yen weakness added to pressure on investors.
The Nikkei 225 Stock Average closed at 64,141.12, down 4.03%, after briefly falling below 63,000 during the session. The benchmark has now dropped more than 11% from its June 25 record close, meeting the commonly used definition of a market correction.
The broader TOPIX fell 2.72% to 3,919.21. Its decline was smaller than the Nikkei’s because the price-weighted Nikkei is more heavily affected by high-priced technology and semiconductor shares, although selling spread widely across the Tokyo market.
Nikkei CNBC and NQN framed the session as a deepening unwind of the AI trade. U.S. technology shares fell overnight, the Philadelphia Semiconductor Index dropped sharply, and investors continued to reassess valuations across memory chips, semiconductor equipment, electronic components and data-center infrastructure.
South Korea’s market was closed for a holiday, leaving Tokyo as the main regional venue for investors seeking to reduce exposure to the semiconductor theme. That intensified selling in Japanese chip-related shares, particularly Kioxia, Tokyo Electron, Advantest, SCREEN Holdings and Sumco.
Kioxia plunged 16.1%, its steepest one-day fall since November 2025, and has now lost more than half its value from its recent peak. The memory-chip maker had become one of the most visible symbols of Japan’s AI-driven rally after its market value briefly overtook Toyota Motor in June, but it is now at the center of the correction.
Sumco dropped more than 15%, while SCREEN Holdings fell more than 12%. Tokyo Electron, Advantest and SoftBank Group also came under heavy pressure as investors cut positions in companies tied to AI servers, chip testing, memory demand and large-scale AI infrastructure investment.
The selloff came despite stronger earnings signals from major overseas chip companies, including Taiwan Semiconductor Manufacturing Co. and ASML. The market reaction showed that investors are now focusing less on current earnings and more on whether future capital spending and memory-chip demand can justify the valuations reached during the first-half rally.
SoftBank Group’s decline weighed heavily on the Nikkei because of its large index impact. The company has become a proxy for global AI sentiment through its technology investments and exposure to artificial intelligence infrastructure, making it especially vulnerable when investors pull back from the AI theme.
Seven & i Holdings moved against the broader market, rising after the retailer said it was in discussions to acquire a stake in Polish convenience-store operator Zabka Group. The move would expand Seven & i’s overseas convenience-store exposure beyond its core markets in Japan and North America.
The yen remained near its weakest level in about four decades, trading around the 162-yen range against the dollar. The currency gained little support from the equity-market turmoil because the dollar also attracted safe-haven demand as geopolitical risk increased.
Finance Minister Satsuki Katayama again warned that authorities were ready to act against excessive currency moves. The weak yen supports exporters’ overseas earnings, but it raises import costs for fuel, food and raw materials, placing further pressure on households and smaller companies.
Japanese government bonds gained as investors moved away from equities, pushing the 10-year yield below the highs reached during last week’s bond selloff. The decline eased immediate concern that the yield would test the politically sensitive 3% level, but bond investors remain focused on inflation, fiscal policy and future BOJ decisions.
Policy concerns remained central after the government moved to reassure markets over the Bank of Japan’s independence. The final version of Japan’s economic policy blueprint is expected to state that decisions on specific monetary policy tools remain under the BOJ’s authority, following market concern over earlier wording that appeared to call for closer alignment with the government’s growth strategy.
Katayama said there had been no change in the government’s position that specific monetary policy measures fall under the BOJ’s jurisdiction. The government also said it would seek to preserve confidence in Japan’s finances by steadily reducing the debt-to-GDP ratio.
The blueprint is also expected to include a decision by early August on whether to reduce the 8% consumption tax on food. A temporary cut could ease pressure on household budgets, but it would also raise questions about replacement revenue and Japan’s already heavy public-debt burden.
For households and companies, the combination of a weak yen and high energy prices remains one of the biggest risks. Higher oil prices raise the cost of gasoline, electricity, transportation and imported materials, while currency weakness magnifies the impact in yen terms.
Brent crude traded around the mid-$80 range as renewed U.S.-Iran fighting kept attention on energy supplies and shipping routes in the Gulf. For Japan, which relies heavily on imported energy, a prolonged disruption would worsen the trade balance, add to inflation and reduce household purchasing power.
TV Tokyo’s business coverage has continued to focus on the pressure from prices, wages, energy and asset-market volatility on households. Although wage growth has improved, consumers remain exposed to higher import costs and rising living expenses, especially if oil prices stay elevated.
The global backdrop deteriorated as the chip selloff spread across Asia and into futures markets in Europe and the United States. Taiwan’s market fell sharply, Hong Kong and mainland Chinese shares weakened, and U.S. equity futures pointed lower as investors reduced exposure to technology shares.
The main points to watch next are whether the Nikkei can stabilize above 64,000, whether bargain buying emerges in Kioxia, Tokyo Electron, Advantest and SCREEN Holdings, and how South Korean semiconductor shares trade when the Seoul market reopens.
Investors will also monitor whether the yen moves beyond its recent low near 162.84 to the dollar, whether Japanese authorities move from verbal warnings to intervention, and whether the 10-year JGB yield remains below 2.7%.
Oil prices and developments in the U.S.-Iran conflict will remain central to Japan’s inflation and growth outlook. Markets will also watch the final economic blueprint, the possible food-tax decision, and signals ahead of the BOJ’s July 30-31 policy meeting.
