Japanese stocks fell sharply on Tuesday, as tech shares sold off

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Japan's Nikkei 225 pared its losses on Tuesday but still closed sharply lower, as a global sell-off in chipmakers and escalating conflict in the Middle East drove investors away from riskier assets. The benchmark ended down 4.03% at 64,141.12, after tumbling as much as 6.18% during the session.

Japanese stocks have been under pressure in recent weeks, weighed down by uncertainty over global interest rates and geopolitical tensions.

The Nikkei now sits 11.3% below its record closing high of 72,366.34 set on June 25. The broader Topix index dropped 2.72% to 3,919.21. The sell-off mirrored overnight losses on Wall Street, led by tech stocks, despite upbeat U.S. economic data and a strong earnings season.

Despite resilient U.S. economic indicators and a robust earnings season, technology shares remain vulnerable to concerns over valuation and export restrictions. The Nikkei's decline from its June peak reflects investor anxiety about global growth and Middle East instability. Market participants will be watching for further signals from U.S. inflation data and central bank policy decisions.