The sell-off in technology stocks spreads, the Nikkei posts its largest single-day drop since April last year, Kioxia falls as much as 16%, and Brent crude slips slightly.

The sell-off in technology stocks spreads, the Nikkei posts its largest single-day drop since April last year, Kioxia falls as much as 16%, and Brent crude slips slightly.

```

The global wave of technology stock sell-offs is accelerating. Investors are questioning whether the AI-driven rally can be sustained, triggering large-scale reductions in positions. Asia-Pacific stock markets experienced their most severe single-day decline of the year on July 17.

The Nikkei 225 index plunged as much as 6.2% during the session, eventually closing down 4% at 64,141.12 points. This marked the largest single-day drop since April 7, 2025. The MSCI Asia-Pacific Stock Index fell 2.9%, with its drop from the peak reaching 10%, entering technical correction territory and likely hitting the lowest closing level in over two months. Stock index futures point to further pressure on Western markets—Nasdaq 100 futures fell 1.6%, and European stock markets are expected to open down more than 1%.

Chip stocks bore the brunt. Despite TSMC's earnings beating expectations, its stock was heavily sold off; Japan's Kioxia Holdings plunged as much as 16% during the session. Meanwhile, Netflix's earnings disappointed markets again, with its after-hours shares down 9%, further worsening sentiment. The Philadelphia Semiconductor Index has dropped about 19% from its June peak.

Bloomberg strategist Mark Cranfield pointed out that the speed and scale of declines in Asia's major stock indexes are showing characteristics of panic selling, as investors are eager to lock in gains for the remainder of the year. With July half over, traders' paper losses continue to accumulate, intensifying the deterioration of market sentiment.

Nikkei 225 closed down 4% at 64,141.12 points. Japan's TOPIX closed down 2.7% at 3,919.21 points. South Korea's stock market was closed for the holiday.Nasdaq 100 futures fell 1.6%, European stocks expected to open down more than 1%.The yen hovered near 162.45, still near a forty-year low.The US 10-year Treasury yield held around 4.55%, essentially flat.Japanese long-term bond yields rose notably, with the 30-year yield up 6 basis points to 3.89%, the 40-year up 5.5 basis points to 3.88%Brent crude's morning rally reversed, down 0.5%Spot gold held at $4,004.93Bitcoin fell 1.9% to $62,858.5

Chip Stocks Bear the Brunt, AI Narrative Faces Crisis of Confidence

The core conflict of this sell-off is the increasingly skeptical view of the market as to whether AI capital expenditures can translate into real returns. The four major US AI operators are expected to spend more than $725 billion in total capital expenditures this year, and investors are closely examining every earnings report for evidence that these massive investments are paying off.

TSMC's earnings exceeded analysts' expectations, but its stock still suffered, reflecting the fragility of current sentiment. Alphabet fell 4.4% in the previous trading session; reports say its flagship AI model delivery is months behind schedule, further dampening confidence in tech giants.

IG International market analyst Fabien Yip said: "As investors become increasingly skeptical about whether companies can achieve sustainable growth while maintaining healthy balance sheets, capital expenditure guidance has once again become the focus. We expect market volatility to continue during earnings season, but this is unlikely to be the end of the AI story."

George Boubouras, head of research at hedge fund K2 Asset Management, said on Bloomberg TV: "There is no doubt, this is an extremely rare month of volatility in the chip stock sector. We have not overweighted chip stocks this year, and so we were not hit too hard during this round of volatility. But the rotation that is happening now is indeed quite intense."

Speed and Depth of Sell-Off Send Panic Signals

Bloomberg strategist Mark Cranfield pointed out that the speed and scale of declines in Asia's major stock indexes are showing characteristics of panic selling, as investors are eager to lock in gains for the remainder of the year. With July half over, traders' paper losses continue to accumulate, intensifying the deterioration of market sentiment.

The Asian semiconductor stock index is set for its biggest weekly drop since early March. The Philadelphia Semiconductor Index has fallen about 19% from its June peak. The valuation pressure on tech stocks is not new—over recent weeks, investors have increasingly worried that this year's AI-driven rally has gone too fast and too far.

Bond, Forex and Commodity Markets Under Pressure Simultaneously

Stock market turmoil is having ripple effects in other markets. Japanese long-term bond yields rose notably, with the 30-year yield up 6 basis points to 3.89%, and the 40-year up 5.5 basis points to 3.88%; Australian bonds also edged lower. The US 10-year Treasury yield maintained around 4.55%, essentially flat.

The yen hovered near 162.45, still close to a forty-year low. Japan's finance minister issued another warning about possible market intervention, but the yen remained under pressure. The New Taiwan dollar fell 0.3% against the US dollar to 32.346.

In forex markets, the dollar strengthened slightly against most major currencies. Wells Fargo Asia Pacific chief strategist Chidu Narayanan commented that three threads—tech stock declines, rising energy prices, and higher US real yields—are supporting the dollar: "US economic data is not ‘overheated,’ but it is strong enough to support the dollar, and other factors are marginally tilting toward dollar strength."

Brent crude's morning rally reversed, down 0.5%. However, its cumulative weekly gain has reached 10%, is set to mark the largest weekly rise since April, and rekindles concerns about inflationary pressures. Gold faces its largest weekly drop since early June. Heightened tensions in the Middle East and rising oil prices have reinforced expectations that the Federal Reserve will keep rates high for a prolonged period, pressuring gold prices. Fed Vice Chair Philip Jefferson previously hinted that if inflation fails to fall as expected, further rate hikes should be considered.

Risk DisclaimerThe market comes with risk; investing requires caution. This article does not constitute personal investment advice and does not take into account individual users’ investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are appropriate for their circumstances. Invest at your own responsibility. ```