The Nikkei 225 Index Closes 2.77% Lower

The Nikkei 225 Index dropped 1839 points or 2.77 percent on Friday to close at 64584 points. Losses were led by Softbank (-7.57%), Mitsubishi Motors (-7.31%) and Renesas Electron (-7.24%).

Asian equity markets declined on Friday, tracking a sharp selloff on Wall Street as investors questioned whether massive artificial intelligence investments would generate sufficient returns. Technology-heavy markets in Japan and South Korea led regional losses as major chipmakers came under pressure. Sentiment was also weighed by fresh US tariffs of 10%–12.5% on imports from most major trading partners, replacing the expiring 10% global import duty and reviving concerns over global trade. Asian governments criticized the measures while stopping short of retaliation. Meanwhile, Brent crude climbed above $100 a barrel amid escalating Middle East tensions, fueling inflation concerns and reinforcing expectations of tighter monetary policy.

The Nikkei 225 Index fell 2.73% to end at 64,611 on Friday, reversing the previous session's gains, while the Topix Index dropped 1.05% to 4,011, dragged down by a broad retreat in tech stocks amid fresh worries over massive AI spending. Investor caution was further amplified by escalating tensions in the Middle East, which pushed oil prices sharply higher and heightened inflation fears. On the data front, Japan's headline inflation rose to 1.7% in June, the highest level in six months, from 1.5% in May, reinforcing the case for further interest rate hikes by the Bank of Japan. Technology and AI-related shares led the declines in Japan, including Kioxia Holdings (-9.5%), Advantest (-6.0%), SoftBank Group (-7.1%), Tokyo Electron (-5.0%), Taiyo Yuden (-6.1%), Lasertec (-4.3%), and Murata Manufacturing (-2.7%). Despite Friday's pullback, the Nikkei 225 Index rose 0.7% for the week, while the Topix Index gained more than 2%, marking their first weekly advances in three.