Tokyo's equity market weakened on Friday, with the Nikkei 225 retreating sharply as investors digested renewed anxiety over corporate spending on artificial intelligence. The Nikkei was down 2.69% at 64,634.04 as of 0112 GMT, while the Topix eased 1.28% to 4,002.09.
The Nikkei has surrendered more than 7% so far this month and tumbled into correction territory last week. Market moves in Tokyo were influenced by developments abroad, including large falls in U.S. tech names and pressure from other Asian tech-heavy benchmarks such as South Korea's KOSPI and the U.S. Philadelphia semiconductor index.
Shares of Alphabet fell around 7% overnight after the company disclosed plans for higher spending while also burning cash, a slide that fed concerns about whether hefty outlays on AI infrastructure are sustainable. U.S. indexes closed lower, with the Nasdaq off more than 2%.
"The (Nikkei) index has been affected by overseas factors, not local cues. Many Japanese companies will start reporting their earnings from today, and if their outlook is strong, the index's trend may change," said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.
Chip-related stocks were among the hardest hit. Advantest and Tokyo Electron declined sharply, losing 6.33% and 5.43% respectively. Technology investor SoftBank Group fell 7.42%, and memory-chip maker Kioxia dropped 4.4%.
By contrast, names linked to domestic consumption fared better. Central Japan Railway rose 1.17% and East Japan Railway gained 0.60%, reflecting pockets of demand-driven resilience. Shipping stocks also posted small advances, with Kawasaki Kisen up 0.61% and Mitsui OSK Lines rising 0.88%.
Otsuka Holdings, the maker of Pocari Sweat, climbed 1.6% to become the day's largest percentage gainer on the Nikkei.
This market snapshot highlights a bifurcation across sectors: technology and chip suppliers are under pressure following overseas developments tied to AI spending, while companies more dependent on domestic demand or logistics show modest strength. The path of upcoming corporate earnings reports could be decisive for the index's near-term direction.