The Nikkei 225 closed at 63,442 on September 11, down 2.8% and at its weakest in several weeks. Oil above $108 a barrel, fears of higher US rates and the prospect of another Bank of Japan increase set off a broad sell-off led by artificial intelligence and chip stocks.
The index opened under heavy pressure after Nikkei futures fell overnight and Wall Street weakened. By 10 a.m. it was down more than 1,600 points. By 11 a.m. the drop was past 1,800, and Advantest accounted for a large share of it. Buyers stayed away until the close, with investors trimming positions before US consumer price data.
Oil jumps
Brent crude traded above $108, its highest since May, as tensions between the United States and Iran sharpened and traders worried about energy supply. Japan imports most of its energy. Oil over $100 already hurts there; at $108 it threatens inflation, household spending and company margins.
The yen offered little cover. It changed hands around the mid-153 range against the dollar after a strong September rally from the 160 level seen earlier in the summer. A firmer yen cuts import costs, but it also hurts exporters and has unsettled carry trades, and investors judged it too small a help against the oil surge.
Rates at home and abroad
Japanese producer prices rose 7.6% in August from a year earlier. The figure firmed up expectations that the BOJ will lift its policy rate from 1% to 1.25% at its September 17-18 meeting. Reuters reported that markets have nearly fully priced that in, and analysts expect further tightening toward 1.75% by the second quarter of 2027.
The BOJ held rates at its July 30-31 meeting, though board member Hajime Takata dissented and voted for a rise to 1.25%. Tokyo inflation, stronger wages, upgraded GDP numbers and the yen’s swings have since added to the argument for acting.
Government bond yields are near multi-decade highs. The 10-year yield recently rose above 3% for the first time since 1996. Banks gain from wider lending margins when yields rise. High-valuation technology shares lose, because future earnings are discounted at a higher rate.
Across the Pacific, Fed funds futures priced a 71.1% chance of a 25-basis-point hike at the Fed’s September 15-16 meeting, up from 61.2% in the previous session, Reuters reported.
Chips and AI names lead the fall
SoftBank Group lost 4.1%. Advantest was the biggest drag in the morning session. Tokyo Electron, Kioxia, Fujikura, Furukawa Electric, Ibiden, Murata, Taiyo Yuden and Lasertec were all under close watch as investors weighed whether this was another short correction or a deeper rethink of the AI trade.
South Korean chip stocks fell as well: Samsung Electronics dropped 3.9% and SK Hynix 3.6%. Elsewhere in Asia, Kospi fell 2.3%, Taiwan’s Taiex 1.7%, Hong Kong’s Hang Seng 0.8% and Australia’s S&P/ASX 200 1.2%.
The monthly major special quotation for index futures and options was also due, which can exaggerate index moves. The report said it may have added to volatility but was not the main cause.
Exporters felt the yen’s climb toward 153, having enjoyed a tailwind when the dollar was near 160. Automakers, machinery makers and electronics exporters were among them. Toyota and Honda remain profitable at current rates.
