Japanese stocks closed lower, following Wall Street's overnight decline, partly due to renewed concerns about an AI bubble. The Nikkei 225 Index fell 2.4% to 48,625.88 points, dragged down by losses in some technology and banking stocks.
The cabinet of Japanese Prime Minister Sanae Takaichi approved the largest supplementary budget since the pandemic, allocating funds to address voter dissatisfaction in an economic package. However, this move may unsettle investors closely monitoring the country's fiscal health.
The Japanese Cabinet Office stated on Friday that the stimulus plan includes 17.7 trillion yen ($112 billion) in general account spending. The funds will likely be raised through a supplementary budget, marking a 27% increase compared to the plan introduced by the former prime minister a year ago. The total stimulus package amounts to 21.3 trillion yen, covering measures such as price subsidies and targeted investment support. The largest portion, 11.7 trillion yen, will go toward price relief, including a three-month gas and electricity subsidy of 7,000 yen per household until the end of March, costing the government an estimated 500 billion yen. Additionally, Takaichi allocated 400 billion yen for a 20,000-yen cash handout per child and earmarked 2 trillion yen for regional support.
Japan’s exports rose for a second consecutive month in October as a weaker yen boosted the value of overseas shipments, helping offset the impact of U.S. tariffs. Government data released Friday showed exports grew 3.6% year-on-year in October, following a 4.2% increase in September. The figure exceeded the average forecast of a 1.1% gain. The yen averaged 149.51 against the dollar in October, depreciating 2.5% from a year earlier. A weaker yen increases the value of overseas earnings repatriated by Japanese exporters. However, government data revealed that exports to the U.S. fell 3.1% year-on-year due to sluggish shipments of automobiles, semiconductor manufacturing equipment, and pharmaceuticals. This marked the seventh consecutive monthly decline, though the drop was smaller than September's 13.3% contraction.
