Historic Decline in Japanese Stock Market: Nikkei and TOPIX Plummet Over 8%

In a significant downturn, Japan's Nikkei and TOPIX indices have experienced their steepest drop since 1987, both falling by over 8%. This dramatic decline marks a roughly 20% fall from their peak levels recorded on July 11.

Among the hardest-hit sectors are prominent trading companies, with Mitsubishi, Mitsui and Co, Sumitomo, and Maruben each seeing their stock values plunge by approximately 10%.

The current market turmoil follows a sharp dip observed last Friday, when the Nikkei and TOPIX tumbled by 5% and 6% respectively. Analysts attribute this ongoing decline to the Japanese central bank's recent decision to hike interest rates, coupled with a reduction in government bond purchases.

Adding to the market's woes, the yen has depreciated to its lowest point against the US dollar since January 2024, reaching a value of 142.77. A weaker yen generally exerts additional pressure on Japanese stocks, exacerbating the market's struggles.

The turbulence in the Japanese market is not occurring in isolation. The uncertainty in the US market, influenced by the Federal Reserve's indecision on potential interest rate cuts in September, appears to have unsettled global investors. This has likely contributed to the widespread selloff, compounding the challenges faced by Japanese equities.

This confluence of domestic monetary policy changes and international economic uncertainty has created a perfect storm, leading to Japan's most significant stock market decline in over three decades.