Japan's Nikkei falls as AI doubts, bond stress weigh

TOKYO: Japan’s Nikkei 225 fell sharply on Friday as doubts about the red-hot AI sector emerged and stress in global bond markets weighed on sentiment.

The Nikkei 225 slid 1.06% to 68,308.92 in early trading, poised for a slight weekly decline. The broader Topix slipped 0.24% to 4,081.62.

US equity indexes fell overnight, dragged lower by technology companies after a Financial Times report said OpenAI’s annualized revenue was $20 billion less than the company previously signalled.

Euro zone borrowing costs remained elevated as a surge in oil prices intensified inflation, and concerns lingered over France’s budget.

“Reports that a major unlisted AI company’s revenue fell short of its own forecasts triggered a chain reaction of selling in related stocks, and the sharp rise in crude oil prices also appeared to have an impact,” Sony Financial Group analysts said in a report.

“Globally high interest rates, driven in part by concerns over France’s fiscal situation, are also capping stock price gains.”

Data on Friday showed Japan’s August household spending fell 3.1% year-on-year, underscoring cautious consumer sentiment and persistent inflation pressures.

The Bank of Japan on Thursday noted cost-driven price increases spreading to consumer goods, signalling a meaningful chance of further rate hikes this year.

There were 112 advancers on the Nikkei 225, outweighing 110 decliners, with 3 unchanged.

The largest loser on the Nikkei was SoftBank Group, a major investor in OpenAI, which sank 5.40% and dragged on the index. Furukawa Electric fell 4.83%, followed by Murata Manufacturing, which lost 4.68%.

The index’s largest percentage gainers were Nomura Research Institute, up 5.13%, followed by Baycurrent, up 3.97%, and Shift, up 3.92%.