The Nikkei Stock Average recorded its largest decline since April, with the market feeling uneasy about the valuation of technology stocks.

The Japanese stock market experienced its largest decline in nearly six months, as global risk aversion put pressure on technology stocks and concerns arose that the optimistic sentiment surrounding artificial intelligence had pushed their valuations too high. On Wednesday, blue-chip Nikkei 225 index fell by as much as 4.7%, while the broader TOPIX index dropped by 3.3%. These were the largest intraday declines since April 11th. The market turmoil also affected the yen, as investors sought safe-haven assets, driving the yen to its highest level in nearly a week. Government bond futures initially rose, but experienced a slight decline following a weak 10-year bond auction at lunchtime. "This is a moment of reckoning after a period of significant appreciation, as valuations become the focus," said Anna Wu, cross-asset investment strategist at Van Eck. "The main reason for the sell-off is a reversal in sentiment, shifting from previous optimism to a rational attitude of 'letting the performance speak'." Stocks related to AI were among the hardest hit sectors, with SoftBank Group falling by as much as 14% and chip equipment manufacturer Advantest seeing a drop of over 10%. Despite Wednesday's decline, SoftBank Group's stock price has still surged by over 140% since the beginning of the year, benefiting from market expectations surrounding its AI-related investments.