Tech Stocks Drag Nikkei Down, But Yen's Pullback Softens the Blow

The Nikkei 225 ended Monday on a down note, dragged lower by a sharp sell-off in technology stocks. The index closed at 36,215.75, marking a 0.48% drop for the day. Early in the session, the benchmark index fell as much as 3.14%, briefly dipping below the critical 36,000 mark for the first time since August 13. However, the index managed to claw back some losses as the yen weakened from a one-month high, offering a much-needed reprieve for Japanese exporters.

The technology sector was the primary driver of the market’s downturn, following the lead of Wall Street's tech-heavy stocks, which experienced a steep sell-off last Friday. Semiconductor-related companies were hit the hardest, with Tokyo Electron, a major supplier of chipmaking equipment, tumbling 2.27%. Lasertec, which specializes in chip-testing machinery, suffered the steepest percentage loss, plummeting 4.8%. These declines underscored broader concerns about the semiconductor sector's outlook as global chip demand fluctuates.

While the losses in tech were significant, the yen's retreat from its recent strength helped cushion what could have been a more severe decline. A stronger yen usually undermines Japanese exports by making them more expensive in international markets, so its drop provided a welcome boost for companies that rely on overseas revenue. This currency movement helped offset the tech sector’s weakness and provided some stability as the session wore on, allowing the Nikkei to regain its footing above the key 36,000 level.

Investors remain cautious, however, as the volatility in the tech sector continues to raise concerns about future market stability. The recovery of the Nikkei after its sharp intraday drop suggests that the broader market may remain resilient, but global uncertainties and currency fluctuations will likely keep traders on edge in the coming days.