Japan's Nikkei slumps 5.5% as market rout deepens on AI worries

Japan's Nikkei 225 fell 5.5% in a sharp session as a broader market rout deepened, with the decline attributed to mounting concern over artificial intelligence-related valuations. The move reflects a risk-appetite channel: because the index is heavily weighted toward technology and semiconductor-linked names, a repricing of AI-driven earnings expectations transmits quickly into index-level losses and drives selling across correlated growth stocks. Export-oriented and chip-supply-chain equities are most exposed, while the yen's behavior matters for the index's translation effects, since a stronger currency weighs on exporters' overseas earnings. Traders will be watching the next Bank of Japan policy signals and U.S. technology sector earnings guidance, as any change in global AI capital spending expectations would directly influence whether the selloff persists.

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