Tokyo, Japan – Japan’s Nikkei 225 index dropped 2.5% on Thursday, marking one of its steepest losses this year, as tech stocks followed Wall Street’s Nasdaq decline. Semiconductor and electronics giants led the downturn amid growing investor concerns over valuations and rising Treasury yields.
Tech Sell-Off Hits Asian Markets
The Nikkei’s slump mirrored a 2.2% overnight drop in the Nasdaq, driven by falls in U.S. tech titans like Nvidia and Apple. Asian markets with heavy tech exposure, including South Korea’s KOSPI (-1.8%) and Taiwan’s TAIEX (-1.5%), also declined.
Key Japanese losers:
– Tokyo Electron (TEL): -4.3%
– Advantest: -5.1%
– SoftBank Group: -3.8%
– Sony & Fanuc: Both down over 3%
Why Are Markets Falling?
- Rising Bond Yields: The U.S. 10-year yield hit its highest since November 2023, pressuring growth stocks.
- Fed Rate Cut Doubts: Sticky U.S. inflation and cautious Fed minutes reduced hopes for 2024 rate cuts.
- Yen Strengthens: The JPY rebounded to 153/USD, threatening exporters’ overseas profits.
Domestic Challenges for Japan
- Inflation Slowdown: April core inflation eased to 2.2%, below the Bank of Japan’s target, clouding further rate hike plans.
- Investor Sentiment: “Profit-taking in tech was inevitable after the rally,” noted Shinkin Asset’s Naoki Fujiwara.
What’s Next?
- Short-Term Volatility: U.S. jobs data (due Friday) could sway Fed expectations.
- Long-Term Opportunities: Corporate reforms and strong fundamentals may attract buyers post-dip, per Kathy Matsui, ex-Goldman strategist.
Bottom Line: The Nikkei’s drop highlights global market linkages. Tech stocks and Treasury yields remain key watchpoints for investors.
