Japan’s Nikkei share average tumbled 3% on Tuesday, marking its steepest decline in over seven months, as investors offloaded tech stocks following Wall Street’s sharp losses overnight. The index fell as much as 3.3% to 48,661.52, its lowest level since October 23, before closing around 48,808.33, while the broader Topix slipped 2.49% to 3,264.11. Analysts noted that once the Nikkei breached the key 50,000 level, sentiment worsened and selling accelerated, with even bargain hunters waiting for further declines.

The sell-off was triggered by U.S. stocks’ sharp drop on Monday, with the S&P 500 and Nasdaq closing below key technical levels for the first time since late April, as investors anticipated quarterly results from retailers and Nvidia, and awaited the delayed U.S. jobs report. High-profile tech stocks led the losses: SoftBank Group fell 7.2%, Tokyo Electron lost 5.17%, and Advantest dropped 3.6%. Fibre optic cable makers, beneficiaries of AI demand, also plunged, with Fujikura down 9% and Sumitomo Electric Industries falling 7.45%.

Retailers were hit as well, with Ryohin Keikaku, operator of Muji stores, declining 1.09% after a 9.4% fall the previous day, amid China warning its citizens against travel to Japan amid escalating tensions over Taiwan. Analysts cited the sell-off in tech and AI-linked stocks as a typical risk-off reaction, reflecting growing caution among investors.