Nikkei 225 rebounds 1.82% as US yields ease and AI fears fade

Japan's Nikkei 225 index rebounded sharply on Friday, October 16, 2026, rising 1.82% to 65,598.63 in Tokyo morning trading, recovering from its largest daily drop since March the previous day. The recovery was driven by falling US Treasury yields and easing concerns about AI financing. The rebound followed Thursday's 4.9% plunge to 64,425.95, triggered by worries over AI-related debt and profitability, particularly surrounding CoreWeave. Nvidia CEO Jensen Huang's defense of CoreWeave's financial position helped stabilize sentiment. Gains in Toyota and Mitsubishi UFJ indicated buying spread beyond hard-hit tech stocks, though the bounce only partially repaired a six-day decline. The Nikkei's heavy concentration in technology stocks, with Advantest holding an 11.5% index weight and tech comprising nearly 44% of the index, amplified both the selloff and recovery. Regional markets also rebounded, with South Korea's KOSPI rising 2.8%, though analysts warned the simultaneous fall in stocks and bond yields could signal the early stages of an AI boom unwinding.