Nikkei falls 2.8% as chip stocks slide and Bank of Japan holds rate at 1.25%
Key Facts
The Nikkei 225 fell 2.8% at 20:03 GMT on October 30, after dropping as much as 3% during the session, in a decline led by technology and chipmaking equipment stocks. The fall came on the same day the Bank of Japan held its short-term interest rate at around 1.25%, according to its decision issued on October 30. EL7 data showed the index closing at 62,989.4 points, compared with 64,659.47 points at the previous day's close. Stocks had started the session lower; the Associated Press reported that the Nikkei was down 2.6% at 62,960.60 points in early trading. The broader TOPIX index also lost 1.3%, according to Investing.com.
Japanese market losses came as concern mounted over whether huge investments in artificial intelligence could generate returns to justify the spending. Reuters linked the sell-off to concerns about the sustainability of funding for the AI boom and losses in technology shares on Wall Street. Maki Sawada of Nomura said, "The Japanese stock market is being affected by this decline in U.S. technology shares," pointing to the connection between weakness in the sector in the United States and the movement in Japanese stocks. Amazon and Intel earnings reports added to those concerns after showing substantial cash burn. In the previous U.S. session, the Nasdaq Composite fell 1.4%, while the S&P 500 lost 0.3%, its first decline in four days.
Pressure was concentrated in companies tied to chipmaking equipment, with Advantest shares falling 9.1% and Tokyo Electron shares dropping 5.6% on October 30, Reuters reported. The two companies led sector losses during the Japanese session, as investors reassessed demand expectations linked to AI. The sell-off extended to U.S. technology shares the previous day, when Alphabet Class A shares fell 12.6%. That was the stock's worst day since Class A shares began trading more than 20 years ago, according to the Associated Press. Alphabet's loss offered a prominent example of how renewed doubts about technology company valuations are affecting global markets.
The drop followed a session of gains in Japan, with the Nikkei rising 1.1% to 64,659.47 points on October 29, according to Reuters via Stockopedia. The comparison highlights the index's shift from gains the previous day to a sharp decline in the next session, alongside a drop in U.S. technology-related stocks. The Bank of Japan's decision to hold its rate at around 1.25% did not change the market's direction on October 30, as trading pressure focused on technology and chip equipment stocks amid global concerns over AI spending. The bank said its quarterly outlook report presents its estimates for economic activity and prices and assesses risks. The report is usually published in January, April, July and October, according to the Bank of Japan.
The Bank of Japan scheduled the release of the minutes of its monetary policy meeting held on October 29 and 30, as well as the meeting's Summary of Opinions, for November 10, 2026, according to the bank's calendar. The date follows the October 30 decision to hold the short-term interest rate at around 1.25%. Publication of the two documents is expected to provide details of the meeting's deliberations, while investors had ended the October 30 session amid broad losses in Japanese technology shares. The bank publishes its quarterly economic outlook report in January, April, July and October, while its meeting calendar indicates that the minutes and Summary of Opinions will be released on November 10.