On Monday, July 8th, the Japanese stock market plummeted from a record high during intraday trading due to investors taking profit after several days of gains.
The Nikkei index hit a record high of 41,112.24 points in volatile trading, but closed down 0.32% at 40,780.70 points. The broader TOPIX index closed down 0.57% at 2867.61 points. #Japanese market#
On the market, the automobile and parts, chemical, petroleum and plastics, and steel industries saw the biggest declines.
Among the 225 constituent stocks of the Nikkei index, only 53 rose, while 171 fell.
In terms of individual stocks, electrical equipment manufacturer Yaskawa Electric was one of the worst performers, falling 4.4% due to disappointing revenue results. Chip-making equipment giant Tokyo Electron fell 0.9%.
On the other hand, ARM Holdings, the UK chip design company in which SoftBank Group holds a 90% stake, saw its US-listed stocks surge to a historic high, boosting SoftBank Group's rise by 0.4%.
The Nikkei volatility index, which measures implied volatility of Nikkei 225 options, fell 0.48% to 16.76.
Last Friday, due to weaker-than-expected US labor data pushing expectations for an interest rate cut as early as September, major Wall Street indexes performed strongly, boosting market sentiment. The technology-led NASDAQ index and S&P 500 index both hit record highs.
Some Japanese technology stocks followed their US counterparts' rise, supporting the Nikkei index.
However, Maki Sawada, a stock strategist at Nomura Securities, said there was a feeling that stocks were somewhat overbought. After Japan's major stock indexes rose for five consecutive days, reaching a record intraday high, investors sought to lock in profits.
Charu Chanana, global market strategist and head of foreign exchange strategy at Saxo, said that if market participants interpret Federal Reserve Chairman Powell's testimony as dovish or if US inflation data later this week shows further cooling, a stronger yen could also put pressure on the market. "As the yen rises from its record low, the room for Japan's stock market to outperform may continue to shrink," she said.
A weakened yen tends to boost overseas earnings for Japanese exporters when they repatriate profits.