Japan's Indexes Dropped 2%, Yen Sank to New Four-Decade Low

Akira Ito
02 Jul, 2026
Tokyo

Japan's indexes traded down and halted a three-day rally, tracking losses in tech stocks in overnight trading in New York. 

The Nikkei 225 stock average decreased 2.5%, the TOPIX declined 0.1%, and the yen traded at 162.56 against the U.S. dollar. 

Investors continued to debate the appropriate level for the yen, as regulators showed little urgency in shoring up the faltering currency. 

The yen sank to a new 39-year low against the U.S. dollar, despite the growing consensus over at least two rate hikes before the year's end.

Japanese corporations are parking their overseas earnings in foreign accounts amid a lack of domestic investment opportunity and weak economic growth conditions. 

In stock trading, chip- and AI-related stocks led decliners in Tokyo, as investors reassessed the sustainability of investment in AI infrastructure. 

Hyperscalers—Meta, Alphabet, and Microsoft—are scaling back their plans for AI-driven data centers amid rising costs, a longer-than-expected payback horizon, and growing community resistance.

Japan, South Korea, and Taiwan are key beneficiaries of the global datacenter boom, and semiconductor equipment makers and electric and electronic component makers are experiencing higher sales and earnings because of the rising U.S. demand. 

Investors are increasingly questioning the hyperscalers' use of debt, private credit, and other means of financing as Meta and Alphabet ramp up investments that surpass annual earnings. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 2.5% to 68,733.15, and the broader TOPIX declined 0.1% to 4,014.98. 

Kioxia Holdings dropped 14%, Tokyo Electron decreased 7.3%, Advantest Corp. declined 10.1%, Taiyo Yuden Corp. eased 9.9%, and Fujikura Ltd. fell 7.9%.