Japan’s Nikkei 225 Index fell as much as 2.3% on Friday before trimming losses to close 0.34% lower at 62,693, as selling pressure in technology and artificial intelligence shares began to ease. Despite the late-session rebound, the benchmark still dropped 4% for the week, marking a second straight weekly decline as investors rotated out of high-flying tech and AI names into safer assets such as government bonds.
Market sentiment was further dampened by rising geopolitical tensions in the Middle East, amid reports that the US and Israel had drawn up contingency plans for potential renewed strikes on Iran following next month’s midterm elections. Several heavyweight constituents remained under pressure, including Taiyo Yuden (-3.9%), Disco Corp (-3.8%), Mitsubishi UFJ (-2.3%), Hitachi (-4.4%) and Nintendo (-1.8%).
Meanwhile, Japan’s inflation accelerated in September, moving above the Bank of Japan’s 2% target and bolstering expectations for another interest rate hike later this year.
