Japan Stocks Sink as Rout in Technology Shares Spreads to Asia

A sell-off in the biggest technology companies in the United States rippled into Asia on Tuesday, with stock markets in Japan falling as U.S. markets appeared to stabilize.

Japan’s tech-heavy Nikkei 225 fell 1.4 percent with Softbank, the Japanese investment firm with major holdings in the technology sector, falling about 5 percent. Arm Holdings, the U.S. listed chip design company that is 88 percent owned by Softbank, dropped more than 10 percent on Monday.

Many financial markets in Asia, including those in China and Taiwan, were closed on Tuesday for Lunar New Year. Markets in mainland China are set to remain closed for a week.

Shares in U.S. listed technology companies, especially those that have been driven up in price by investors enthusiastic about the profit making potential of artificial intelligence, tumbled on Monday after the Chinese A.I. company DeepSeek said it could match the capabilities of the most advanced chatbots using far fewer expensive computer chips.

Futures on the S&P 500, which allow investors to bet on the index outside of typical trading hours, nudged lower during Asian trading on Tuesday, after the index fell 1.5 percent on Monday. Shares in the Silicon Valley chip company Nvidia, which erased roughly $600 billion of its market value on Monday, appeared to stabilize.

Nvidia is the standard-bearer of a group of giant technology companies known as the Magnificent Seven. Those tech stocks have led the entire market higher in recent years by producing lofty returns, although concerns have grown that the broader market was overly dependent on their performance.

“While vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification beyond the Mag 7,” said Seema Shah, chief global strategist at Principal Asset Management. She said that the idea that U.S. stocks would continue an unabated rise “is now facing uncertainty,” noting that investors are contending with stubborn inflation and the prospect of hefty tariffs that could weigh on spending and economic growth.