Nikkei drops 2.2% and breaks below 200-day average as AI sell-off deepens

Japan’s Nikkei 225 tumbled in Friday morning trade, extending the global technology sell-off as investors rotated into haven assets. The benchmark was down 2.2 per cent at 61,518.38 in early trade, with semiconductor and bank stocks leading the declines, according to the Wall Street Journal.

Chipmaker Kioxia Holdings fell 9.2 per cent and Mizuho Financial Group dropped 5.6 per cent. The slide followed overnight losses in US technology shares, the Journal reported, with investors also watching crude oil prices and developments in Ukraine and the Middle East.

Market analysis by forex.com showed the Nikkei’s decline had taken the index below its key 200-day moving average — the bottom of a broader support zone that also includes the Liberation Day uptrend from the April 2025 low and horizontal support at 62,714. The same analysis warned of a possible extension toward 60,433, the July 29 swing low, followed by 60,000.

The yen strengthened alongside the bond rally. The dollar stood at 156.32 yen, down from 157.19 at Thursday’s Tokyo stock market close, the Journal reported, and forex.com noted the dollar-yen pair had broken beneath support at 156.68, a level that had attracted bids on each of its previous retests.

Nikkei Asia reported Japanese bond yields fell on Friday as concerns over mounting debt in artificial-intelligence-related sectors sent investors “scrambling for haven assets”, describing a flight-to-quality mood that weighed on Asian stocks more broadly. Forex.com added that the Nasdaq 100 volatility gauge, VXN, had surged 4.30 points on Thursday while MOVE, which measures implied Treasury volatility, jumped 10.90 points to 106.84.

Sources: Wall Street Journal · Nikkei Asia · forex.com