Technology related companies caused Japan's Nikkei share average to close substantially lower on Friday, while new concerns over valuation caused U.S. stocks to decline overnight.
The Nikkei 225 Index ended the week down 3.5%, falling 2.4% to settle at 48,625.88. Over the previous five days, the overall Topix lost 1.8% and decreased by 0.1%.
After an early surge, Wall Street equities fell sharply overnight as excitement over Nvidia's quarterly results, a key indicator of artificial intelligence, waned.
According to Nomura Securities strategist Fumika Shimizu, traders in Japan may also be cautious as a holiday weekend approaches and additional government stimulus raises concerns about the country's finances. Nvidia's record profits failed to allay fears about overextended valuations in the AI sector.
As the country's cabinet approved a major economic stimulus plan, long term Japanese government bond rates were on the verge of record highs and the yen was trading close to a 10 month low.
"Concerns about Japan's fiscal deterioration and the so called negative aspects of yen weakness are likely emerging," Shimizu stated.
The Nikkei index saw 163 gains and 62 declines. Heavyweights in the AI industry, such as Advantest, which fell 12%, and SoftBank Group, which fell 10.9%, were among the index's worst losers. M3, up 6.9%, and Obayashi, up 5%, were the index's biggest gainers.
