Following robust gains in the last session, the Japanese stock market dipped significantly on Tuesday. The Nikkei 225 index sank below 39,600 points in spite of broadly positive cues from Wall Street the previous night. The likely cause of this downturn is the anticipated policy shift of the Bank of Japan (BOJ), as markets anticipated the termination of its negative interest rates and yield curve control policies.
Investor expectations were driven by successful spring wage negotiations among major Japanese firms resulting in substantial pay increases. On Tuesday, the Nikkei 225 benchmark index was down by 181.69 points or 0.46 percent, settling at 39,558.75 points. However, this follows a sharp increase in Japanese shares the previous Monday.
Key contributors to the loss were industry heavyweights and technology stocks. SoftBank Group and Uniqlo operator Fast Retailing saw shares decrease by nearly 1 percent and 2 percent respectively. Car manufacturers Honda also saw a modest 0.1 percent decline, whereas Toyota saw a slight increase of 0.4 percent.
In the technology sector, shares of Advantest dropped more than 2 percent, and Screen Holdings stocks saw a modest decrease of 0.5 percent, while Tokyo Electron's stocks rose slightly by 0.3 percent.
In the financial sector, Sumitomo Mitsui Financial and Mizuho Financial each gained almost 1 percent, while Mitsubishi UFJ Financial saw a slim 0.3 percent rise.
Major exporters showed mixed results. Panasonic and Mitsubishi Electric stocks rose by 0.4 to 0.5 percent each, while Canon and Sony stocks saw slight declines of 0.2 to 0.3 percent each.
Significant losers included Terumo and Chugai Pharmaceutical, each dropping more than 3 percent, alongside Toppan Holdings, Eisai, and Tokyo Electric Power, which dipped by almost 3 percent each.
However, Sumitomo Realty & Development saw a substantial gain of more than 4 percent, with Nidec and Inpex also gaining almost 3 percent each.
In terms of currency, the US dollar was trading in the lower 149 yen range on Tuesday.
On Wall Street, on Monday, in spite of some losses, markets closed mostly in the green. The technology-heavy Nasdaq index and the S&P 500 each made gains after experiencing a three-day losing streak.
European markets were comparatively less successful. The French CAC 40 and the UK's FTSE 100 dipped by 0.2 and 0.1 percent respectively, while the German DAX index barely moved.
Crude oil prices surged on Monday due to concerns over supply, after drone attacks on Russian oil refineries orchestrated by Ukraine, coupled with falling crude exports from Iraq and Saudi Arabia. Consequently, West Texas Intermediate Crude oil futures for April rose by $1.68, or 2.1 percent, to settle at $82.72 a barrel.
