TOKYO: Japan’s Nikkei share average closed more than 2% lower on Friday, tracking Wall Street’s weak finish overnight and pressured by a stronger yen.

The Nikkei fell 2.63% to 38,053.67 in its biggest daily decline since Sept. 30. For the week, the index posted a 0.37% gain.

The broader Topix fell 1.9% to 2,644.26, but rose 0.99% for the week.

All three US stock indexes closed lower on Thursday after Microsoft and Meta Platforms highlighted the growing artificial intelligence costs that could hit their earnings, curbing enthusiasm for megacaps that have fuelled the market rally this year.

On Thursday, the Bank of Japan (BOJ) maintained ultra-low interest rates as widely expected, but its less dovish remarks lifted the yen against the US dollar overnight.

A stronger Japanese currency tends to hurt exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

“BOJ Governor (Kazuo) Ueda did not use the words he used to use yesterday, which the market took hawkish,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

At the post-meeting news conference on Thursday, Ueda said he will not say the BOJ can “afford to spend time” before deciding when to shift the policy. Some market participants took this as the BOJ opening its doors for a rate increase as early as December. Technology investor SoftBank Group fell 5.62%. Uniqlo owner Fast Retailing slipped 2.79 to drag the Nikkei the most. Chip-testing equipment maker Advantest fell 4.41%.