Nikkei Falls as AI Investment Risks Weigh on Tokyo Stocks

The Nikkei Stock Average fell on Monday, October 19, closing at 64,480.14 after a decline of 0.7 percent. The index experienced a brief plunge of over 2 percent during the session, driven by investor anxiety regarding the financial burden of artificial intelligence infrastructure and the ability of investing companies to recoup costs.

Market volatility was triggered by the declining share price of U.S. data center operator CoreWeave Holdings Inc., which sparked a selloff in chip and AI-related stocks. Major index components suffered significant losses, including SoftBank Group, which dropped 3.3 percent, Fujikura, which fell 3.4 percent, and Resona Holdings, which shed 2.7 percent. In contrast, the broader Topix index edged higher by 0.04 percent to 4,067.48 due to bargain hunting.

Additional pressure came from rising global bond yields and macroeconomic factors. French government bond yields climbed following violent protests in France that raised doubts about the government's fiscal deficit management. Sentiment was further dampened by West Texas Intermediate crude oil futures surging above 100 U.S. dollars per barrel. In currency markets, the dollar traded at 158.51 yen.