Tokyo Stocks Soar on BOJ Warning and AI Rebound

Tokyo stocks surged on July 31 as the Nikkei 225 closed at 64,362.02, up 2,494.59 points. The broader TOPIX rose 50.80 points to 4,003.30, recovering the 4,000 level after several days of volatility.

The rebound came after the Nikkei was driven sharply lower by selling in artificial intelligence and semiconductor-related shares. Stronger sentiment toward U.S. technology shares following earnings from major AI-related companies helped fuel the rally.

The Bank of Japan's decision to keep interest rates unchanged while warning that inflation risks remain tilted to the upside also influenced market sentiment. The BOJ warned for the first time that underlying inflation could exceed its 2% target, citing rising medium- and long-term inflation expectations and increased corporate price-setting behavior.