Japan's Nikkei share average took a significant hit on Friday, dropping below the psychological 50,000 mark as tech stocks led a broad market decline. The selloff, which mirrored losses in US tech stocks, has put the index on track for its most substantial weekly drop since early April.

Market Performance

The Nikkei's retreat comes just days after reaching a record peak on Tuesday, highlighting the volatile nature of recent market gains.

Tech Sector Leads the Decline

Japanese tech stocks bore the brunt of the selloff, with industry giants experiencing significant losses:

This downturn in Japanese tech stocks appears to be in lockstep with overnight losses in US tech stocks, particularly those related to artificial intelligence:

The sharp decline in these high-flying tech stocks reflects growing investor concerns about stretched valuations in AI-related companies that have been driving markets to record highs.

Corporate Earnings Impact

While the tech sector dominated headlines, corporate earnings results significantly influenced individual stock performances:

These diverse outcomes underscore the importance of company-specific factors in driving stock performance, even amidst broader market trends.

The current market correction serves as a reminder of the delicate balance between growth expectations and market valuations, particularly in the tech sector. As investors reassess their positions, market participants will be closely watching for signs of stabilization or further volatility in the coming sessions.

Japan's stock market witnessed a historic rally as the Nikkei share average reached unprecedented heights, driven by strong performances in the technology sector and a weakening yen.

Record-Breaking Performance

The Nikkei share average closed at an all-time high of 52,411.34, marking a significant 2.1% increase. This surge contributed to an impressive 16.6% gain for October, the largest monthly increase since January 1994. The broader Topix index also hit record levels, closing at 3,331.83 with a 0.9% gain.

Tech Sector Leads the Charge

The rally was primarily fueled by technology stocks, following robust sales forecasts from global tech giants Amazon and Apple.

• Amazon reported its fastest cloud revenue growth in nearly three years
• Apple's CEO Tim Cook provided holiday-quarter forecasts exceeding Wall Street expectations

Japanese chip companies were at the forefront of this upward trend:

Currency Impact

A weaker yen, which slid to record lows against the euro and multi-month lows against the dollar, provided additional support to heavyweight exporters. This currency movement came after the Bank of Japan held rates steady, maintaining its accommodative monetary policy.

Market Outlook

MUFG Asset Management suggests the market has room for another 10% rise. This optimistic outlook is driven by two key factors:

1. Global AI momentum
2. Domestic fiscal stimulus hopes under new Prime Minister Sanae Takaichi

As the Japanese market continues to break records, investors will be closely watching how these factors play out in the coming months.