After three consecutive days of gains, the Japanese market took a sharp downturn on Thursday, bucking the broadly positive trends in global markets overnight. The Nikkei 225 tumbled 3 percent, falling below the 37,900 mark, with widespread declines across all sectors. This downturn came after the Bank of Japan raised short-term policy rates and announced plans to scale back monthly bond purchases in a hawkish shift.
In a surprise move, the central bank hiked its key interest rate to 0.25 percent and outlined a detailed plan to reduce monthly bond buying incrementally.
The benchmark Nikkei 225 Index plummeted 1,204.19 points, or 3.08 percent, to 37,897.63, after dipping to a low of 37,737.88 earlier in the session. This follows a significant surge in Japanese shares on Wednesday.
Notable losses included market heavyweight SoftBank Group, which plunged more than 6 percent, and Fast Retailing, the operator of Uniqlo, which dropped nearly 4 percent. In the automotive sector, Toyota plummeted almost 7 percent, and Honda declined nearly 5 percent.
In the technology sector, Tokyo Electron lost nearly 2 percent, and Screen Holdings slipped more than 8 percent. Conversely, Advantest soared over 14 percent after raising its full-year profit forecast due to strong demand for chip testers.
In the banking sector, Sumitomo Mitsui Financial fell more than 1 percent, Mitsubishi UFJ Financial slipped over 2 percent, and Mizuho Financial declined nearly 1 percent.
Among major exporters, Canon plummeted over 7 percent, Mitsubishi Electric plunged nearly 12 percent, Sony declined almost 4 percent, and Panasonic slid more than 8 percent.
Among other significant decliners, Konica Minolta plummeted nearly 15 percent. Yamaha and Mitsubishi Electric both plunged more than 12 percent, and Isetan Mitsukoshi slid almost 12 percent. Companies like Sumitomo Realty & Development, Toyota Tsusho, and Takashimaya each dropped more than 10 percent. J. Front Retailing, Mitsubishi Estate, Mitsui Fudosan, and Tokyu Fudosan each slipped over 9 percent, while Alps Alpine, Denso, and Subaru each declined nearly 9 percent.
Conversely, Sumitomo Pharma skyrocketed more than 11 percent, Toto surged more than 6 percent, Socionext gained almost 6 percent, and Hitachi added over 4 percent. Resona Holdings and Nisshin Seifun Group both advanced more than 3 percent, while CyberAgent rose nearly 3 percent.
In the currency market, the U.S. dollar was trading in the lower 149 yen range on Thursday.
On Wall Street, stocks showed a strong performance throughout the trading day on Wednesday, continuing a sharp upward trend that began early in the session. The major averages all inclined after mixed trading on Tuesday, with the tech-heavy Nasdaq posting a particularly substantial gain.
The Nasdaq surged 451.98 points, or 2.6 percent, to 17,599.40, more than recovering the 1.3 percent loss from the previous session. The S&P 500 soared 85.86 points, or 1.6 percent, to 5,522.30, while the Dow increased by 99.46 points, or 0.2 percent, to 40,842.79.
European markets also moved higher on Wednesday. The U.K.'s FTSE 100 Index jumped by 1.1 percent, the French CAC 40 Index advanced by 0.8 percent, and the German DAX Index climbed by 0.5 percent.
Crude oil prices rose sharply on Wednesday due to concerns over potential supply disruptions amid escalating tensions in the Middle East, coupled with data showing a larger-than-expected drop in U.S. crude inventories last week. West Texas Intermediate Crude oil futures for September closed up $3.18, or 4.3 percent, at $77.91 a barrel.
