TOKYO - Japanese stocks suffered a sharp sell-off on June 8th as weakness in U.S. technology shares and growing concerns over higher global interest rates triggered widespread selling, sending the Nikkei Stock Average down 2,563.52 points, or about 3.8%, to close at 64,024.60.
The benchmark index briefly plunged more than 3,100 points during morning trading and fell below the 64,000 mark for the first time since May 25th. While the market recovered part of its losses by the close, the decline still ranked as the fifth-largest point drop in the history of the Nikkei.
The sell-off followed a steep decline in U.S. technology stocks on Friday, when the Philadelphia Semiconductor Index (SOX) dropped 10%. Stronger-than-expected U.S. employment data fueled speculation that the Federal Reserve may keep interest rates elevated for longer, prompting investors to reduce exposure to AI- and semiconductor-related shares.
Market participants also pointed to growing concerns over the outlook for the AI sector. Reports suggesting that future generations of advanced AI chips may require fewer memory components than previously expected weighed on memory-related stocks, while plans by major South Korean chipmakers to expand production further pressured sentiment.
Technology stocks led losses across Asia. South Korea's market also came under heavy pressure, with SK Hynix and Samsung Electronics falling as much as 8% to 9% during trading. The Korean benchmark index at one point dropped more than 8%.
Despite the sharp decline, analysts noted that selling eased after the opening session. Major Japanese AI-related stocks, including SoftBank Group and memory-chip companies, avoided significant new lows after the initial wave of selling, suggesting that panic selling remained limited.
Some market strategists argued that Japanese equities still retain underlying support after their strong rally this year. Trend-following investors are estimated to have average purchase costs well below current levels, reducing the risk of forced selling despite the recent correction.
Currency markets also remained in focus, with the yen trading in the 160-yen-per-dollar range. Analysts noted that speculative investors continue to maintain large bearish positions against the yen, a factor that has generally supported Japanese equities by boosting the earnings outlook for exporters.
Attention is now shifting to a series of major economic events this week. Investors are closely watching U.S. consumer price data due on June 10th, which could provide further clues about the Federal Reserve's policy path. Market participants are also monitoring upcoming meetings of the European Central Bank, the Bank of Japan, and the Federal Reserve amid growing expectations that policymakers may maintain a tighter stance on inflation.
Rising geopolitical tensions in the Middle East added another layer of uncertainty. Crude oil futures moved higher in after-hours trading, with prices approaching $94 per barrel, raising concerns about renewed inflationary pressures.
The broader Topix index fell nearly 3% for a third consecutive session, while approximately 70% of stocks listed on the Tokyo Stock Exchange Prime Market ended lower. Trading value reached roughly 9.9 trillion yen, reflecting heavy investor activity during one of the market's most volatile sessions this year.
Source: Kyodo
