Global Market: Nikkei gains 1% as AI, chip stocks rally; BOJ hikes rates

Japan's Nikkei share average rose sharply on Friday as investors bought artificial intelligence and semiconductor-related stocks, taking cues from a technology-led rally on Wall Street overnight, Reuters reported.

The tech-heavy Nikkei rose 1% to 64,786.86 by 0018 GMT, with gains led by AI and chip-related stocks.

Read more: BOJ raises interest rates to 31-year high in widely expected move


The BOJ subsequently raised its policy rate to 1.25% from 1%, taking borrowing costs to their highest level in 31 years. Reuters reported that the decision was aimed at containing the risk of inflation overshooting the central bank's 2% target.

The decision was approved by a 7-2 vote at the BOJ's two-day policy meeting, with board members Toichiro Asada and Ayano Sato dissenting. Governor Kazuo Ueda was scheduled to hold a news conference at 0630 GMT to explain the decision.

Read more: Global Market Today: Asian stocks, bonds gain as oil extends decline

SoftBank Group, a major investor in AI-focused startups, jumped 5%, while chip-equipment makers Advantest and Tokyo Electron gained 4% and 3.6%, respectively.

Fast-growing technology companies tend to be sensitive to tighter monetary policy because of their relatively high valuations and reliance on future growth. Easing crude oil prices reportedly reduced inflation concerns, providing some support to growth-oriented technology stocks.

Japanese technology stocks had declined on Thursday as investors shifted into beaten-down gaming shares. That trade reversed on Friday, with gaming stocks coming under pressure as technology shares rebounded.

Nintendo and Konami each fell about 2%.

The broader Topix index slipped 0.2%, reflecting its lower concentration of AI-related companies compared with the Nikkei.

Market breadth on the Nikkei remained mixed, with 111 of its 225 components gaining, 113 declining and one stock unchanged.