Nikkei sinks 1,811 points on chip-stock rout as Mideast tensions persist — July 25, 2026

Top U.S. Stories

• U.S. strikes on Iran continued for another consecutive night as the conflict shows no sign of de-escalating, with the Houthis in Yemen claiming an attack on two Saudi oil tankers in the Red Sea. Why it matters: the widening front raises the risk of a broader disruption to Middle East oil shipping routes, feeding directly into volatile crude prices worldwide.
• President Trump said the U.S. will hold Iran responsible for the Houthi attacks on Saudi tankers, raising the stakes for further escalation.
• U.S. stocks closed a volatile week in mixed fashion: the Dow recovered while tech shares, including SanDisk, kept falling on memory-chip oversupply worries. Why it matters: the split between blue-chip industrials and semiconductor stocks signals investors are starting to separate AI-infrastructure winners from a memory-chip sector now facing a supply glut.
• Crude oil, which briefly approached $100 a barrel earlier in the week on the Houthi tanker attack, pulled back toward the high $80s by Friday but still ended the week up sharply.
• In Ukraine, Russian missile and drone strikes hit cities nationwide, causing multiple casualties, while President Zelenskyy is set to meet President Trump next week to press for expanded air-defense support.

Markets

Japan’s Nikkei 225 tumbled 1,811.45 points (-2.73%) to close at 64,611.15 as a sell-off in memory-chip names spread across the market. In the U.S., the Dow Jones Industrial Average rose 235.60 points (+0.46%) to 51,947.25, while the Nasdaq Composite slipped 0.64% to 24,975.82. The dollar traded near ¥163.82 against the yen (ECB reference, July 24). WTI crude eased to roughly $88/barrel after briefly nearing $100 on the Houthi tanker attack, though it still finished the week sharply higher.

Stocks in Focus

• Kioxia Holdings: Shares tumbled after TSMC signaled a further expansion of its 2026 capital spending, which markets read as a sign of coming memory-chip oversupply. The sell-off deepened on July 24 as reports of tighter leveraged-ETF rules tied to South Korea’s SK Hynix hit Seoul’s KOSPI, dragging Kioxia down in sympathy.
• Tokyo Electron / Ibiden: Japanese semiconductor-equipment names led the Nikkei’s decline as the memory-chip sell-off spread.
• SanDisk: Shares tumbled sharply in the U.S., weighing on the broader tech sector alongside the memory-chip rout.

This is not investment advice; not a recommendation to buy or sell any security.

Compass Insight

Two forces are colliding this week: escalating Middle East conflict and a sudden reassessment of AI-chip supply. The Iran war and Houthi tanker attacks keep oil prices swinging, which flows through fairly quickly to gasoline and energy bills for households. Separately, the sharp sell-off in Kioxia and other memory-chip names — triggered by TSMC’s expanded capex plans — suggests markets are starting to ask whether chip supply is catching up with, or even overtaking, AI demand, a shift from the pure “AI-boom” narrative of recent months. Short term, watch crude prices and the yen for signs of how the Mideast situation is being priced. Medium term, the key questions are whether elevated energy costs complicate central bank decisions — including the Bank of Japan’s July 30–31 meeting — and whether AI-related capital spending translates into durable earnings, or proves to have outrun near-term demand in some corners of the chip supply chain.