Japan's Nikkei Wavers as AI and Tech Rally Loses Steam

Japan's stock market lacked clear direction at the start of the week, with the Nikkei 225 hovering near 69,700 while the broader Topix index edged higher, as gains in industrial and consumer stocks offset weakness in technology shares. The moves reflected a continued rotation away from high-priced technology and semiconductor names amid mounting concern over the sustainability of the artificial intelligence trade, with investors wary of excess capacity and intensifying competition among AI providers, including from China. Declines among chip-related and AI-linked stocks were partly offset by strength in heavy industry and other cyclical sectors. The pullback in technology follows a powerful AI-led rally earlier in the year, and comes alongside rising Japanese government bond yields and improving business sentiment reflected in the Bank of Japan's latest Tankan survey, which has supported financial and cyclical shares. Investors are awaiting a run of domestic economic data, including household spending, producer prices and machine tool orders, for further clues on the strength of the recovery and the outlook for further interest-rate increases by the central bank.