The Nikkei 225 fell more than ¥1,500 at one point on the morning of the 31st, dropping below ¥65,000. AI-related and semiconductor stocks were sold amid growing expectations of a US rate hike, dragging down the broader domestic market.
The Nikkei 225 fell at the start of the week, with the decline widening in part after trading began. The index briefly fell below ¥65,000, failing to reach the level that would have provided a basis for the closing price. Market participants are watching the moves in the US market for clues as they assess the direction of the Japanese market.
In the US market on the 28th, remarks suggesting the possibility of a Federal Reserve rate hike prompted selling in AI-related and semiconductor stocks. This trend spread to the Tokyo market, apparently accelerating declines in related stocks.
As expectations for a hike in US policy rates grow, investors are wary of valuation adjustments in growth stocks and a shift of funds into defensive stocks. AI and semiconductor stocks have been the main focus of selling and are weighing on the Nikkei 225.
Today's moves show how the outlook for US interest rates and developments in related markets can affect short-term price movements in Japanese equities. Investors will need to watch the US market and AI- and semiconductor-related stocks closely to assess what comes next.