The Nikkei 225 index closed Friday with a 4.0% gain, reaching 64,362.02 points, driven by a rally in semiconductor stocks.

Microsoft's earnings forecast alleviated market concerns over massive spending on artificial intelligence (AI) infrastructure, boosting U.S. semiconductor stocks overnight, which in turn lifted Japan's chip-related shares.

The Bank of Japan kept its interest rate unchanged on Friday but reiterated its readiness to continue raising borrowing costs to counter rising inflation risks. The central bank stated, "The Bank of Japan will continue to raise its policy rate and adjust the degree of monetary accommodation in line with developments in economic activity, prices, and financial conditions."

Factors such as the situation in the Middle East, growing AI-related demand, and exchange rate trends will be key considerations for the Bank of Japan as it determines the timing and pace of future rate hikes.

The Japanese government conducted a yen-buying intervention in the foreign exchange market overnight, but it failed to provide lasting support for the yen. U.S. Treasury Secretary Bessent said Thursday that Japan likely intervened to boost the "undervalued" yen, signaling U.S. approval of the action.