Nikkei falls 1,082.58 yen to 61,825.26 on AI overinvestment fears

The morning session on the Tokyo Stock Exchange saw the Nikkei average extend its losses, following a mixed U.S. market where the Dow edged up while the Nasdaq dropped sharply. The divergence stemmed from earnings reports by Meta Platforms and Tesla, which rekindled worries about overinvestment in artificial intelligence. That sentiment spilled over into Japan, where high-priced semiconductor-related stocks led the decline, and selling spread to electronic components and machinery.

At the same time, falling U.S. long-term interest rates, driven by fading expectations for additional rate hikes within the year, weighed on bank stocks. Conversely, defensive and domestic-demand shares such as real estate and retail attracted safe-haven buying. The Nikkei briefly widened its loss to the 1,400 yen level before stabilizing in the 61,800 range. Market participants are now watching whether the rotation into defensive stocks will persist in the afternoon.