Nikkei falls 1.7%, Kospi drops 2.4% as chip selloff spreads to Asia

Key Facts

Japanese and South Korean stocks fell during trading on Friday, 23 October 2026, following sharp losses in U.S. technology and chip stocks in the previous session. The Associated Press's market coverage showed Japan's Nikkei down 1.7% and South Korea's Kospi falling 2.4% during trading. The declines followed a 1.2% drop in the S&P index on Thursday, its worst session since July, while the Nasdaq Composite lost 2.6%, according to the agency. Losses in the U.S. chip sector were steeper, with Bloomberg reporting that the Philadelphia Semiconductor Index plunged 6.7% in the same session. The Nasdaq 100 fell 2.9%, extending the selloff in technology stocks. In currency markets, Bloomberg reported that the yen outperformed all its major peers during Asian trading amid demand for safe havens.

In Japan, core inflation, which excludes fresh food prices, rose to 2.1% year on year in September, according to Investing.com. The reading matched the median market forecast, according to Reuters, following an annual increase of 1.7% in August. Headline inflation also accelerated to 2.1% in September from 1.9% the previous month, matching the core rate. On wholesale prices, Reuters had reported ahead of the consumer price data that annual inflation reached 6.8% in September. Wholesale prices thus rose faster than consumer prices during the same month.

Reuters linked inflationary pressures in Japan to higher fuel costs resulting from the conflict in the Middle East, alongside rising import costs caused by the weak yen. The agency also cited price pressures stemming from strong demand tied to artificial intelligence among the factors driving costs higher. In economic activity data, the preliminary reading of Japan's services activity index rose to 52.0 in October from 51.3 in September, according to a separate Reuters report. By contrast, the preliminary manufacturing index fell to 53.3 from 54.1 the previous month. The improvement in the services reading coincided with a slowdown in the manufacturing reading, reflecting diverging paths of activity during October.

In the AI memory sector, SK Hynix said Solidigm had halted its review of pre-IPO financing options and a potential initial public offering. The company attributed the move to capital market conditions and share price movements, saying "the review was halted in light of market conditions and share price trends." The potential offering was one of the options for financing a new factory in the United States to meet growing demand for AI-related memory, according to the company's statement. In an earlier statement on financing options, SK Hynix stressed the need to consider the economic impact of any financing structure on existing shareholders. It said "any approach must be assessed not only in terms of its structure, but also in terms of its overall economic impact on existing shareholders."

On monetary policy, the Bank of Japan set its overnight interest rate target at around 1.25% in its previous decision in September. The bank said in the decision that it would encourage the uncollateralized overnight call rate to remain around that level. Reuters had reported, ahead of the inflation data, that many within the bank were wary of raising rates again at the October meeting. The bank holds its next meeting on 29 and 30 October 2026, according to the monetary policy meeting schedule published on its website. The "Bank's View" section of the Outlook Report is scheduled for publication on 30 October, the day the meeting ends, with the full text to be released on the next business day.