As tech stocks driven by AI experienced a reversal and worries about the Bank of Japan's upcoming interest rate hike intensified, the Nikkei 225 index underwent a technical correction, falling more than 3% on Thursday and dropping at least 10% from the record high reached two weeks ago. Tomo Kinoshita, Invesco Asset Management's global market strategist in Japan, said, "There is no doubt the big drop in Japanese stocks today is driven by the fall in the US stock market. However, the Bank of Japan's likelihood of raising interest rates at the July meeting continues to grow, leading to a significant appreciation of the yen and causing a drop in export-oriented stocks and those heavily dependent on borrowing." Semiconductor stocks, which were highly volatile, took the biggest hit, with Tokyo Electron Ltd. unsponsored ADR falling as much as 5.6%. Tesla and Alphabet's disappointing earnings report earlier raised concerns about the surge in semiconductor stocks. The Nikkei Volatility Index rose to 21.30, its highest level in three months.