Japan's Nikkei falls, JGBs surge as AI jitters spur haven demand
EWJ•Japan's Nikkei 225 fell 0.34% to 62,693.16 on Friday, while the 10-year Japanese government bond yield dropped 8 basis points to 2.8% and the yen reached a one-month high. Investor concerns about AI-sector spending fueled demand for haven assets.
1. Stocks retreat
Japan's Nikkei 225 fell 0.34% to close at 62,693.16, after dropping more than 2% earlier, while the broader Topix slipped 0.79% to 3,965.81. Overseas market moves weighed on shares as investors grew cautious about AI-sector earnings growth; 81 Nikkei constituents advanced and 144 declined.
2. Bonds and yen gain
The 10-year Japanese government bond yield dropped 8 basis points to 2.8%, its lowest since August 7, and was down 13 basis points for the week, its sharpest weekly decline since April 2025. The yen strengthened to 156.08 per dollar, its highest level since September 18.
3. Inflation and rates
Japan's core consumer inflation exceeded the Bank of Japan's 2% target in September for the first time in nine months. Markets expect the central bank to hold rates at its meeting next week, while a Deutsche Bank strategist said the inflation data keeps the BOJ on course to upgrade its outlook and forecast the next hike in January.
