The Nikkei 225 Index dropped over 2% on Friday, falling below 64,900 points after a strong performance the day before. This decline was largely due to a widespread selloff in tech stocks, driven by worries about spending on artificial intelligence.
Investor sentiment grew cautious as tensions in the Middle East escalated, leading to a rise in oil prices and raising concerns about inflation.
In economic news, Japan’s inflation rate climbed to 1.7% in June, up from 1.5% in May. This marks the highest inflation rate in six months, increasing expectations that the Bank of Japan may consider further interest rate hikes.
Tech and AI-related shares were among the hardest hit in Japan, with notable declines seen in companies like Kioxia Holdings (-3.1%), Advantest (-3.9%), SoftBank Group (-5.1%), and Tokyo Electron (-2.0%). Other firms like Taiyo Yuden (-3.4%) and Murata Manufacturing (-2.1%) also faced losses.
Despite the drop on Friday, the Nikkei 225 Index is up more than 1% for the week, putting it on track for a weekly gain after two consecutive weeks of losses.
