The steep Friday retreat was spearheaded by massive losses across major chip sector components, including Advantest and Tokyo Electron. More than half of the Nikkei's constituents lost ground, though the index still managed to retain a 0.2 percent gain across the broader week. Meanwhile, domestic investors are closely monitoring the Bank of Japan for potential forward guidance regarding interest rate increases projected for December.
Key points
Disappointing earnings and massive cash burns at Amazon and Intel stoked investor skeptic…: Disappointing earnings and massive cash burns at Amazon and Intel stoked investor skepticism regarding artificial intelligence profitability.
Declining crude oil prices linked to Middle East peace talks offered modest economic reli…: Declining crude oil prices linked to Middle East peace talks offered modest economic relief for import-dependent Japan.
Market participants expect the Bank of Japan to hold interest rates steady while seeking…: Market participants expect the Bank of Japan to hold interest rates steady while seeking clues on a potential December hike.
Sources checked by our analysis pipeline: 1
TOKYO, Oct 30 : Japan's Nikkei share average dropped as much as 3 per cent on Friday, led by chip-related stocks, as concerns mounted over the sustainability of spending to fund the AI boom.
Tokyo tracked overnight losses on Wall Street, and were given additional impetus by late earnings from Amazon.com and Intel that showed massive cash burns, sending shares of those companies and their peers sharply lower in extended trading.
"This can be seen as a sign of growing concerns regarding the profitability of AI investments, which is weighing on share prices," said Maki Sawada, an equities strategist at Nomura Securities. "The Japanese stock market is being affected by this fall in US technology shares."
The Nikkei was down 2.8 per cent, as of 2003 GMT, after earlier slumping 3 per cent, led lower by chip equipment heavyweights Advantest and Tokyo Electron, which plunged 9.1 per cent and 5.6 per cent, respectively.
Trading has been volatile this week as earnings reports from Japan, the US and South Korea triggered sharp swings in technology stocks.
Japanese policymakers concluded their two-day meeting by maintaining the current borrowing benchmark despite an internal push for tighter monetary conditions. The central bank indicated that additional tightening remains on the horizon as officials assess economic conditions. Markets are now focusing on executive commentary to gauge the exact timing and scale of upcoming adjustments.
The presence of this specific technical formation indicates sustained buying pressure where market participants aggressively accumulated shares from the session's open through its close. Such formations often capture the attention of momentum investors searching for persistent upward movement in prominent equity counters. Four constituents from the broader market index successfully met these strict criteria during the October 29 trading session.
Monetary policymakers in Tokyo have acknowledged that underlying inflation has now reached their target, even as they paused borrowing cost adjustments. Financial analysts believe international market volatility reduces the immediate pressure on officials to tighten policy aggressively. However, the bank remains committed to gradual normalization, setting up potential rate increases later this winter.