Japan's Nikkei 225 drops 3% as global tech selloff hits AI stocks

Japan's Nikkei 225 fell nearly 3% on Friday as a global selloff in technology stocks overwhelmed the Bank of Japan's widely expected decision to hold interest rates steady, reversing Thursday's gains. Chip equipment makers Advantest and Tokyo Electron led the decline alongside SoftBank Group, as investors questioned whether massive artificial intelligence investments will generate sufficient returns. The BoJ kept its rate at 1.25% but signaled inflation pressures could justify further tightening, leaving Japanese stocks facing dual risks. The selloff originated on Wall Street, where Nasdaq fell 1.4% and Alphabet dropped 12.6% on AI spending concerns. Japanese suppliers are exposed to that expenditure cycle, with Ibiden plunging 15.2% and Lasertec down 13.8%. Markets now price roughly 80% probability of a December rate hike.