Global Market: Japan's Nikkei falls 3% as AI spending concerns hit chip stocks; BOJ holds rates

Japan's Nikkei fell roughly 3% as investor concerns about the sustainability of AI-related capital spending weighed heavily on semiconductor and technology shares, while the Bank of Japan kept its policy rate unchanged. The primary transmission channel is risk appetite: heavy index weighting in chipmakers and AI-linked suppliers means sentiment shifts in that segment translate directly into index-level losses, and the hold on rates removed any offsetting support from monetary policy. Because the Nikkei is concentrated in export-oriented and technology names, it is especially sensitive to global AI demand expectations and to yen moves, since a stronger yen erodes the translated earnings of exporters. Traders will watch the next Bank of Japan communication on the policy outlook and any updated guidance on yen-sensitive inflation and wage data, alongside tech-sector earnings and capex commentary from major U.S. chip and cloud firms that set the global tone for AI spending.

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