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Japan’s Nikkei 225 index dropped 3.02% on Monday, falling to 35,292.62 as of 0050 GMT, dragged down by technology and financial stocks. The drop followed a similar sharp decline on Wall Street, where tech stocks had experienced broad sell-offs. This marks the first time since August 13 that the Nikkei has broken below the key 36,000 mark. The broader Topix index also fell 2.84%, reflecting widespread losses across the market.
See: Japan’s Nikkei seen trading at 35653.85 on the VT Markets app.
Semiconductor-related companies were among the biggest losers, led by Lasertec, which fell 8.15%. The company’s sharp drop was mirrored by Renesas Electronics, a chipmaker that saw its stock fall by 7.72%. The tech sector in Japan followed Wall Street’s overnight decline, where fears over interest rates and slowing demand for semiconductors had sparked a sell-off in major US tech stocks.
Also read: Japan’s Nikkei falls after Wall Street’s tech stocks drop
The financial sector saw heavy losses, as falling bond yields abroad reduced earnings potential for banks and insurers. Insurance stocks were the worst performers on the Tokyo Stock Exchange, with the sector falling 4.58%. Banks were not far behind, losing 4.2% on the day. The decline in bond yields dampens expectations for investment earnings, making financial stocks particularly vulnerable in the current environment.
Automotive stocks also took a hit, with shares in this sector falling 4.09%. A stronger yen added to the sector’s woes, reducing the value of overseas earnings and putting pressure on exporters. The yen’s recent strength has made it harder for automakers to remain competitive globally, adding to the sell-off in this industry.
In this environment, tech stocks may remain under pressure as global markets remain uncertain about the outlook for interest rates and demand for semiconductors. Meanwhile, the yen’s strength could continue to weigh on Japan’s exporters, particularly in the automotive sector.
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