Nikkei 225 drops 3% as global tech selloff overshadows Bank of Japan's steady rates

Japan's Nikkei 225 fell nearly 3% on Friday, driven by a global selloff in technology stocks that overshadowed the Bank of Japan's widely expected decision to hold interest rates steady. The benchmark index dropped 2.8%, reversing Thursday's 1.1% gain. Chip equipment makers Advantest and Tokyo Electron led the decline, along with SoftBank Group, as investors questioned whether massive investments in artificial intelligence will generate sufficient profits. The BoJ kept its reference rate at 1.25% but signaled inflation pressures could justify further tightening, leaving Japanese stocks facing risks from both global tech weakness and potential domestic rate hikes. The selloff followed Wall Street losses, with the Nasdaq falling 1.4% and Alphabet plunging 12.6% on AI spending concerns. Markets priced about 80% probability of a December rate hike, with ANZ economists forecasting quarter-point increases in December and March.