Nikkei 225 index was the worst performer for the day, losing 0.9% as it declined from recent record highs

Most Asian stocks pulled back on Thursday, with Nikkei index dropping from record highs, while technology shares wavered ahead of key earnings from chipmaker TSMC.

South Korean shares clocked some gains after the Bank of Korea left interest rates unchanged and signalled a protracted hold on rates.

Nikkei 225 index was the worst performer for the day, losing 0.9% as it declined from recent record highs. The broader TOPIX index, however, gained 0.4% and reached a record high.

The Nikkei was pressured by losses in tech.

Optimism over more fiscal spending by the Sanae Takaichi government– which had fuelled a Japanese stock rally earlier this week– also cooled amid growing questions over just how much headroom the government had to dole out more spending.

Reports that Takaichi planned to declare a snap election by as soon as early-February had sparked bets on increased stimulus spending, especially if her ruling coalition gains a greater foothold in parliament.

But they also triggered turbulence in Japanese bond markets, with 10-year yields racing to their highest levels in this century amid concerns over stretched fiscal spending in the country.

Tech-heavy Asian bourses were mixed ahead of closely watched fourth-quarter earnings from TSMC, the world’s largest contract chipmaker.

Hang Seng dropped 0.5% on losses in tech, while KOSPI gained marginally.

TSMC declined 1.5% in Taipei trade before its fourth-quarter earnings, which are due later in the day.

While the chipmaker is widely expected to clock another quarter of bumper growth, investors were focused squarely on its outlook for 2026, amid some questions over the artificial intelligence industry.

TSMC is widely viewed as a bellwether for AI-driven chip demand, given its dominance in the semiconductor industry.

Broader Asian markets moved in a tight range, as heightened geopolitical tensions across the globe also weighed.

Shanghai Shenzhen CSI 300 and Shanghai Composite indexes dropped nearly 0.5% each, extending losses from Wednesday. Both indexes dropped from multi-year highs after China tightened rules on margin financing trades, aiming to discourage speculation and reduce stock market risk.

Straits Times index declined 0.2%, while ASX 200 added 0.3% on gains in mining stocks.