Amid Panic Selling, Japan's Nikkei Records Largest Single-day Fall of 12.4%

Akira Ito
05 Aug, 2024
Tokyo

Market indexes in Tokyo plunged in Monday's trading steepened three-day losses amid a growing list of worries as investors adjusted to the hawkish central bank.

The Nikkei 225 stock average plunged more than 12% and extended three-day losses to 20% as the Bank of Japan unexpectedly increased interest rates and sparked a sharp reversal in the Japanese yen. 

Last Thursday, the Bank of Japan increased interest rates for the second time since March by 15 basis points to 0.25% and held out for more interest rate increases in the imminent future. 

Investors were also under pressure after a string of weak earnings from mega-cap U.S. technology companies, which also led to the unwinding of the artificial intelligence-linked rally, dragging semiconductor equipment makers. 

The yen continued to advance for the second week in a row and strengthened as much as 4% to close at 142.45 against the U.S. dollar, a sharp jump from 162 only three weeks ago. 

The minutes of the Bank of Japan's policy meeting held on June 13–14 indicated members noted modest economic recovery, and participants decided to delay the release of a detailed bond purchase program until the next meeting. 

The yield on 10-year Japanese government bonds dropped to 0.775% from 1.07% in Friday's trading. 

 

Japan Stock Movers 

The Nikkei 225 stock average recorded the largest decline in points in the index's history, and registered the second largest decline in percentage terms.

The Nikkei 225 stock average declined 3,836 points on October 20, 1987, the day after following the sharp plunge on Black Monday in New York.  

The Nikkei 225 stock average plunged 12.4% or 4,451.28 points to 31,458.42, and the Topix index declined 12.2% to 2,227.15. 

Banks, technology stocks, and industrial and automotive stocks led the decliners for the second day in a row. 

Mitsubishi UFJ Financial plunged 17.8% to ¥1,245.50, Sumitomo Mitsui Financial dropped 15.5% to ¥8,162.0, and Mizuho Financial fell 19% to ¥2,452.0. 

Over the last three trading sessions, Mitsubishi UFJ declined 33%, Mitsui Financial plunged 20%, and Mizuho Financial chopped 27%. 

Softbank Group plunged 19% to ¥6,400.0, Advantest Corp. slid 15.5% to ¥5,313.0, and Screen Holdings dropped 12.7% to ¥9,080.0. 

Over the last three trading sessions, Softbank plunged 31%, Advantest dropped 22%, Tokyo Electron decreased 25%, and Screen Holdings decreased 27%. 

Toyota Motor declined 13.5% to ¥2,232.0, Honda Motor decreased 17.5% to ¥1,251.50, and Nissan Motor fell 14.5% to ¥378.10.