The Nikkei 225 index fell more than 10% to around 31,135 while the broader Topix lost 6.5% to 2,370 early Monday, with both indexes hitting seven-month lows on concerns about rising interest rates in Japan and also under pressure from safe-haven buying. Amid global stock sell-offs and a rapid unwinding of the yen carry trade, domestic stocks and earnings outlooks for Japan’s export-dependent industries have been hit.
Meanwhile, the Japanese yen rose to around 145 yen against the dollar, hitting a fresh high after the Bank of Japan raised interest rates “to around 0.25%,” the highest level since 2008.
Japan’s stock index closed down 5.8% on Friday, its biggest drop since March 2020, on concerns about the impact of a strong yen on Japanese companies and exporters, after possible further interest rate hikes by the Bank of Japan.
Nikkei 225 futures are now suspended amid circuit breaker activation.
A separate statement showed that the Ojibun Bank Japan services purchasing managers’ index (PMI) was revised to 53.7 in July from a preliminary estimate of 53.9 after a contraction of 49.4 in June, marking the sixth expansion in the services sector so far this year, amid improving customer numbers and demand conditions.
The Bank of Japan’s composite Purchasing Managers’ Index (PMI) came in at 52.5 in July 2024, compared with a preliminary reading of 52.6. The latest result came after June’s reading of 49.7, which was the lowest in seven months.
Elsewhere, data showed that Japanese authorities spent 5.53 trillion yen to support the currency through intervention in July.
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