Global Market: Nikkei ends sharply higher as global AI momentum boosts markets

Japan's benchmark Nikkei index rallied sharply on Friday, climbing 4% as investor sentiment improved after strong earnings guidance from Microsoft eased concerns over heavy artificial intelligence (AI) infrastructure spending. According to Reuters, optimism surrounding global technology stocks triggered broad-based buying in Japanese equities.

The Nikkei ended the session 4% higher at 64,362.02 after soaring as much as 5.7% during intraday trade. The broader Topix index also advanced 1.83%, reflecting gains across several sectors.

Technology stocks led the rally, mirroring overnight gains on Wall Street. Reuters reported that Microsoft's stronger-than-expected sales and cloud computing forecast reassured investors that demand for AI-related services remains robust, helping fuel a surge in technology shares globally. The S&P 500 rose 1.7% overnight, while the Nasdaq Composite gained 2.8%.


Japanese AI-related companies posted some of the biggest gains. Chip-testing equipment maker Advantest jumped more than 16%, while SoftBank Group, a major investor in AI-focused startups, surged nearly 14% as investors increased exposure to the sector.

The Bank of Japan's policy decision had little lasting impact on market sentiment. As widely expected, the central bank kept interest rates unchanged while maintaining its guidance that it intends to continue gradually tightening monetary policy amid persistent inflation risks. Investors largely remained focused on the global technology rally rather than domestic monetary policy developments.

According to Reuters, analysts said the strong performance of US technology stocks reinforced confidence that AI-driven investment remains intact, providing a significant boost to Japanese semiconductor and technology companies.

Currency movements had a mixed impact on the market. Japan's intervention to support the yen on Thursday, which drove the currency sharply higher against the US dollar, had limited influence on the broader equity market. However, exporters, particularly automakers, came under pressure as a stronger yen reduces the value of overseas earnings when converted back into Japanese currency.

Toyota Motor fell 1.9%, while Honda Motor declined 2.7%, making automakers among the weaker performers despite the broader market rally.

Corporate earnings also influenced trading. Sony Group recovered from early losses to rise as much as 4.1% after reporting quarterly financial results during the trading session. However, the gains faded by the close, with the stock ending 0.6% lower.

Panasonic emerged as one of the day's strongest performers, surging 19.5% to its daily limit after raising its profit outlook a day earlier, boosting investor confidence in the electronics manufacturer's earnings prospects.

The strong finish capped a session dominated by renewed optimism over AI-related growth, with Japanese technology shares benefiting from improved global risk appetite and robust expectations for continued investment in artificial intelligence, Reuters reported.