The Nikkei 225 recorded its third-largest decline on record at the close of trading. The backdrop was a sharp sell-off in US technology and semiconductor stocks and concerns about rising interest rates, leading to a broad-based plunge in Japanese equities.
The Nikkei 225 fell steadily from shortly after trading began, losing more than ¥3,600 at one point in the early afternoon. It ultimately ended trading ¥3,318 lower than on the 14th, marking its third-largest decline on record. Market participants expressed surprise at the severity of the sell-off.
Toshihiro Nagahama (永濱 利廣), chief economist at Dai-ichi Life Research Institute, identified 3 factors behind the decline. The first was a sharp drop in technology and semiconductor stocks in the US market. He explained that concerns about the sustainability of AI investment and high valuations prompted selling.
The second was concern about rising US interest rates. He pointed out that the latest consumer price index (CPI) exceeded market expectations, increasing expectations of an early rate hike and dampening investor sentiment.
The third was concern in the domestic market over the ¥70,000 range. The view was expressed that selling pressure for a correction at elevated levels, combined with external factors, widened the decline. Chief Economist Nagahama said uncertainty remained over future market movements and that investors should focus on developments in US semiconductor stocks and the latest corporate earnings.