Japan's Nikkei 225 dropped into correction territory after a sharp Friday decline extended losses from its late-June peak. The benchmark fell 4.03% on the day, leaving it more than 11% below its recent record high and underscoring how quickly sentiment has shifted in Tokyo.
The retreat came as investors reacted to a wider global selloff in artificial intelligence and semiconductor shares. Those sectors have been major market leaders, so renewed weakness in chipmakers and AI-linked companies has had an outsized effect on broader indexes, including in Japan.
Tokyo stocks were also pressured by negative cues from Wall Street, where technology-related declines have rippled across global markets. The move suggests investors are cutting exposure to high-growth names as volatility rises and confidence in recent market momentum weakens.
Geopolitical tensions added another layer of caution, contributing to the risk-off mood. With the Nikkei now firmly in correction territory, the latest drop highlights how global tech weakness and external uncertainty are combining to shake Japan's equity market.
