Nikkei stock index falls sharply with muted reaction to BOJ's ETF move

TOKYO (Kyodo) -- The Nikkei stock index tumbled sharply on Friday following a brief plunge of more than 3 percent due to apprehension surrounding the financial performance of several technology firms. Tokyo stocks witnessed a subdued response to the Bank of Japan's (BOJ) decision to intensify the sale of its exchange-traded fund (ETF) holdings.

The 225-share Nikkei Stock Average closed 1,369.36 points, or 2.12 percent, lower at 63,290.11, while the broader Topix index dropped 38.21 points, or 0.95 percent, to 3,965.07. The index's restructuring took effect on Friday. On the prime market, nonferrous metal, electric appliance, and glass and ceramics product issues experienced the steepest declines.

The U.S. dollar briefly weakened to the 157 yen mark following the Bank of Japan's policy decision, but swiftly rebounded as the outcome aligned with market expectations. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., noted that the scale of the BOJ's ETF sales would not substantially influence supply and demand.

Ichikawa further commented that the announcement of the ETF sales was unforeseen at a time when the market remains volatile due to concerns over artificial intelligence (AI). Heavyweights Advantest, Tokyo Electron, and SoftBank Group suffered significant losses, while Ibiden plummeted 15.2 percent to 8,359 yen, despite presenting strong earnings results on Thursday.

These earnings were disclosed overnight, while Intel Corporation had reported weaker-than-anticipated results. The Topix index overhaul had minimal impact on the market, as traders had already anticipated the change after receiving notification of the selected issues, according to dealers.