Global Market: Japan’s Nikkei falls as AI concerns, global bond market stress weigh

Japan’s Nikkei 225 fell sharply on Friday as concerns over the artificial intelligence sector and elevated global borrowing costs dampened investor sentiment, while rising oil prices added to inflation worries, according to Reuters.

The Nikkei 225 declined 1.06% to 68,308.92 in early trading, putting it on track for a modest weekly loss. The broader Topix index slipped 0.24% to 4,081.62.

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Japanese shares tracked overnight losses on Wall Street, where technology stocks came under pressure following a Financial Times report that OpenAI’s annualised revenue was $20 billion below what the company had previously indicated. The report reignited concerns about the sustainability of the AI investment boom.

According to Reuters, elevated borrowing costs in the euro zone, driven partly by surging oil prices and concerns over France’s fiscal position, also weighed on global risk appetite.

Japan’s domestic economic data added to investor concerns. Household spending fell 3.1% year-on-year in August, data released on Friday showed, highlighting continued pressure on consumer demand amid persistent inflation.

The Bank of Japan on Thursday flagged the spread of cost-driven price increases across consumer goods, reinforcing expectations that the central bank could raise interest rates further this year.

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Among individual stocks, SoftBank Group was the biggest drag on the Nikkei 225, falling 5.40%. The company is a major investor in OpenAI and was among the stocks hit by renewed concerns surrounding the AI sector, Reuters reported.

Furukawa Electric declined 4.83%, while Murata Manufacturing lost 4.68%.

On the upside, Nomura Research Institute rose 5.13%, making it the biggest percentage gainer on the index. Baycurrent advanced 3.97%, while Shift gained 3.92%.

Market breadth was marginally positive, with 112 Nikkei 225 constituents advancing, 110 declining and three remaining unchanged.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)