Japan's Nikkei 225 experienced a sharp decline on Friday, as concerns over the artificial intelligence sector and global bond market stress weighed heavily on investor sentiment. The index fell by 1.06%, closing at 68,308.92, setting the stage for a modest weekly loss. The broader Topix index also dipped by 0.24%, ending at 4,081.62.
The downturn was partly fueled by a report from the Financial Times suggesting that OpenAI's annualized revenue was significantly lower than previously projected. This news triggered a sell-off in technology stocks, including major players in the AI sector. Additionally, rising oil prices intensified inflation worries in the Eurozone, further dampening market sentiment.
Analysts at Sony Financial Group noted that the combination of disappointing revenue reports from a leading AI company and surging oil prices contributed to the market's negative performance. They also highlighted that elevated interest rates, driven by concerns over France's fiscal situation, were limiting gains in stock prices.
Data released on Friday revealed that Japan's household spending dropped by 3.1% year-over-year in August, reflecting cautious consumer behavior and ongoing inflation pressures. The Bank of Japan had previously signaled that cost-driven price increases were spreading, hinting at the possibility of additional rate hikes later this year.
Among the worst performers on the Nikkei 225 were SoftBank Group, which plummeted by 5.40%, Furukawa Electric, down 4.83%, and Murata Manufacturing, which lost 4.68%. Conversely, the top gainers included Nomura Research Institute, up 5.13%, Baycurrent, rising 3.97%, and Shift, which gained 3.92%.