Japanese stocks fell sharply on Friday, giving back the previous session's gains as a broad selloff in technology shares weighed on the market. The Nikkei 225 dropped 2.73% to close at 64,611, while the Topix Index declined 1.05% to 4,011.
Technology and AI-related stocks led the losses amid renewed concerns over heavy spending on artificial intelligence. Investor sentiment was also dampened by rising tensions in the Middle East, which pushed oil prices higher and increased worries about inflation.
Economic data added to the cautious mood. Japan's annual inflation rate rose to 1.7% in June from 1.5% in May, marking the highest reading in six months. The stronger inflation data reinforced expectations that the Bank of Japan could continue raising interest rates.
Major technology stocks such as Kioxia Holdings, Advantest, SoftBank Group, Tokyo Electron, Taiyo Yuden, Lasertec, and Murata Manufacturing posted notable declines.
Despite Friday's losses, Japanese equities ended the week in positive territory. The Nikkei 225 gained 0.7% for the week, while the Topix rose more than 2%, marking their first weekly advances in three weeks.
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