Nikkei Falls as NVIDIA Tech Stocks Weigh on Japan Market

Key Takeaways

• Nikkei225 fell 854 points, or 1.39%, with a session high at 61,632.65 and a low at 60,434.15.
• Technology and AI-linked stocks led the sell-off, following US tech weakness and ahead of NVIDIA earnings.
• Topix gained 0.37% to 3,840.7, supported by value shares, banks, and domestic-demand sectors.
• Japan GDP grew 2.1% annualized in Q1, providing support for economically sensitive equities.
• Oil and energy costs remain a risk, with elevated prices weighing on margins and consumption.

US tech weakness set the tone for Japan. NVIDIA, the S&P 500’s largest index-point drag on Monday, fell 1.3% ahead of its earnings on Wednesday. Japanese chip supply-chain stocks followed: Advantest -4.76%, SoftBank Group -3.56%, Tokyo Electron -2.96%, and Kioxia -4.24%. NVIDIA results will be the next key catalyst for Japan’s AI-linked names.

Japan Growth Data Supports Value Rotation

Japan’s Q1 GDP growth of 2.1% annualized, above forecasts, and stronger private consumption and capital expenditure helped underpin value sectors. Bank shares like Mitsubishi UFJ and Mizuho Financial Group rose over 3%, while Topix’s value index gained 0.62%. Investors rotated from high-growth tech to domestic-demand and financials.

Breadth Looks Better Than The Headline Index

Despite the Nikkei’s headline drop, 70% of prime-market stocks rose. The weakness was concentrated in technology and AI-linked heavyweights, leaving the broader market largely stable and showing underlying participation.

Energy Risks Cloud Outlook

Rising oil prices and the Iran conflict’s impact on the Strait of Hormuz continue to pressure Japan’s import-heavy economy. Higher energy costs affect household spending, corporate margins, and inflation expectations, complicating the policy mix for the Bank of Japan.

Technical Analysis

The Nikkei 225 pulled back sharply after failing to sustain momentum above recent highs near 63,817. Price currently trades around 60,604, just above the rising 20-day moving average at 60,959. The short-term momentum has weakened, with the 5-day and 10-day moving averages now below price. 

Read more about Nikkei trends, NVIDIA earnings, and Japan’s market rotation in this article.