The Nikkei 225 index closed sharply lower on Friday, dragged down by declines in technology shares after U.S. stocks retreated overnight amid renewed valuation concerns.
The Nikkei 225 tumbled 2.4% to 48,625.88 points, marking a weekly loss of 3.5%. The broader TOPIX index edged down 0.1% and fell 1.8% for the week.
Overnight, U.S. stocks reversed early gains as optimism over Nvidia's quarterly earnings—a bellwether for AI—faded.
Nomura strategist Fumika Shimizu noted that Nvidia's record profits failed to ease concerns about overvaluation in the AI sector. Meanwhile, Japanese traders remained cautious ahead of holidays and amid worries about national finances following the government's new stimulus measures.
The yen hovered near a 10-month low after Japan's cabinet approved a large-scale economic stimulus package, while long-term government bond yields approached record highs.
"Concerns may be emerging about the so-called negative effects of Japan's deteriorating fiscal health and a weaker yen," Shimizu said.
On the Nikkei, 163 stocks rose while 62 declined. The biggest losers included AI heavyweights such as Advantest, which plunged 12%, and SoftBank Group, which slumped 10.9%.
