Japan’s Nikkei share average edged lower on Monday, weighed down by tech stocks amid investor caution over sky-high valuations for AI-related shares. A more stable yen after recent strength supported the broader market, alongside tailwinds from Wall Street gains on Friday.
Tokyo's stock market saw the Nikkei share average (.N225) decline less than 0.1% to 50,473.84 at the midday recess on December 8. In contrast, the broader Topix index (.TOPX) rose 0.4% to 3,376.43.
Tech stocks provided the biggest drag, with startup investor SoftBank Group (9984.T) falling 2.5% and shaving 93 points from the index. Chip-testing equipment maker Advantest (6857.T) dropped 0.9%, while chip-making machinery producer Tokyo Electron (8035.T) lost 1%, together subtracting 79 points. “There’s a sense of overheating in high-tech stocks, making them susceptible to selling pressure,” said Fumika Shimizu, an equities strategist at Nomura Securities. “The underlying trend of falling tech stocks remains intact.”
Overall, winners outnumbered losers on the Nikkei, with 162 of its 225 components rising, 59 falling, and four unchanged. The index had hit a record high of 52,636.87 in early November before profit-taking focused on AI-related shares. “The Nikkei feels heavy,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “For the time being, I expect stocks to trade sideways. A rise from here would come with high risk.”
Despite declines in chip-related shares, stocks linked to data center demand expectations performed well, with Fujikura (5803.T) soaring 5.7% and Fuji Electric (6504.T) jumping 4.1%. Among the Tokyo Stock Exchange’s 33 industry groups, real estate (.IRLTY.T) climbed 2.6% to lead. Banking (.IBNKS.T) fell 0.7% as the worst performer, though it had risen to its highest level since 1999 last week on Bank of Japan rate hike expectations. Bets are rising for a BOJ interest rate increase next week.