On October 23, Japanese stocks closed slightly lower. The Nikkei 225 fell 0.3% to 62,693.16 points, with electronics and banking sectors weakening and dragging on the broader market.
The decline followed a sharp sell-off in the previous session. On October 22, the Nikkei 225 plunged 2.65% to 62,907.84 points, hitting a near three-month low, as AI and semiconductor-related stocks such as Tokyo Electron and SoftBank Group came under pressure. Uncertainty over returns on AI investment remains a key focus for the market.
According to reports, U.S. tech stocks have recently faced selling pressure, with investors worried about the massive capital spending on artificial intelligence infrastructure and its financing needs. After Meta disclosed cash flow strain from AI-related expenditures, the market further scrutinized tech companies' capital expenditure plans and future profitability. The related sentiment also spilled over into Asian markets, with tech-heavy markets such as Japan and South Korea facing pressure.
At the same time, rising tensions in the Middle East pushed international oil prices higher, with Brent crude once climbing to around $114 per barrel, adding to market concerns about energy costs and inflationary pressure. As risk aversion intensified, U.S. Treasury yields fell notably, reflecting that investors are also reassessing the outlook for economic growth and monetary policy.
Overall, the Nikkei's decline narrowed today, but weakness in electronics and banking stocks shows that market risk appetite remains cautious. Looking ahead, earnings from major U.S. technology companies, the outlook for AI capital spending, and Japan's domestic inflation and interest rate policy will continue to influence the Japanese stock market.
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