Due to the sell-off of chip stocks and geopolitical tensions, the market risk appetite was dampened, leading to a sharp plunge in the Japanese Nikkei index.

Dragged down by the selling of chip-related stocks, the Japanese Nikkei index fell on Thursday; meanwhile, escalating tensions between the US and Iran reignited inflation concerns, prompting investors to avoid risky assets. The Nikkei index fell by 1.3%, closing at 63,360.96 points. Earlier in the session, the benchmark index had dropped by nearly 3%, falling below the 63,000-point mark for the first time since May 22. The broader Topix index dropped by 1.6%, closing at 3,787.08 points. The US military stated on Wednesday that Washington had conducted a new round of airstrikes on multiple targets inside Iran the previous night, hours after President Donald Trump had vowed to launch new attacks if a peace agreement could not be reached. Tech investment giant SoftBank Group dragged down the Nikkei index by 233 points, a decline of 3.6%. Fibocom, the manufacturer of key components for AI data centers, saw its stock price fall by 6%, while semiconductor test equipment maker Advantest saw a decline of 3.7%.