Nikkei index drops nearly 3% amid tech stock decline
The Japanese Nikkei index fell by 3%, influenced by AI concerns and Wall Street performance, despite the Bank of Japan's stability.
Translated by Qiyas from الراي — Original source
Japan’s Nikkei index fell as much as 3% on Friday, weighed down by declines in stocks tied to the semiconductor industry amid growing concerns over the sustainability of spending fueling the artificial intelligence boom.
Tokyo losses followed Wall Street’s overnight performance, which faced additional pressure from the financial results of Amazon and Intel, revealing massive cash burn. Shares of both companies, along with others, dropped in after-hours trading.
Maki Sawada, an equity analyst at Nomura Securities, said, “This can be seen as a sign of growing concerns about the profitability of AI investments, which is weighing on stock prices.”
The market was largely unaffected by the Bank of Japan’s surprise announcement that it would accelerate the pace of selling exchange-traded funds (ETFs) starting in January, as the central bank kept interest rates unchanged in a move widely expected.
The Nikkei index fell 2.1% to close at 63,290.11, after earlier dropping 3%, with shares of semiconductor equipment makers Advantest and Tokyo Electron falling 5.9% and 5.2%, respectively.
Trading saw volatility this week, as earnings reports from Japan, the United States, and South Korea triggered sharp swings in technology stocks.
Meanwhile, the broader Topix index fell 1% on Friday but remained relatively stable compared to its performance earlier in the week.
Despite the losses, falling crude oil prices, driven by optimism over Middle East talks, supported Japanese stocks. Japan, lacking natural resources, relies heavily on energy imports, particularly from the Middle East.
Of the 225 stocks on the Nikkei index, 123 declined, 100 rose, and two remained unchanged.
In addition to Advantest and Tokyo Electron, major losers in the semiconductor and AI sectors included EIPDEN, whose shares plummeted 15.2%, Laser Tech, which fell 8.8%, and SoftBank Group, which dropped 6%.
The Tokyo Stock Exchange also saw some significant gains, with Konami, the video game manufacturer, surging 15% to become the largest percentage gainer on the Nikkei index. It was followed by Oriental Land, operator of the Tokyo Disney Resort, which rose 8.5%.
