Nikkei Average plunges 3,005 yen, 3rd largest drop on record, reversing from previous day's all-time high

On the Tokyo stock market on the 26th, the Nikkei average plunged by 3,005 yen from the previous day to 69,360 yen, recording the third largest drop in history. This was a sharp reversal after having hit a record high the previous day with a gain of 3,191 yen, almost wiping out that gain in one day. Amid speculation that US OpenAI's IPO would be postponed, profit-taking selling hit AI and semiconductor-related stocks. Meanwhile, the yen traded in the upper 161 yen range against the dollar, with limited movement due to wariness of government/BOJ currency intervention. BOJ board member Tamura suggested a neutral interest rate of 'around 2%' and indicated continued rate hikes every few months.

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Nikkei Average reverses from previous day's record high, plunges 3,005 yen On the Tokyo stock market on the 26th, the Nikkei average closed at 69,360.88 yen, down 3,005.46 yen from the previous day. The decline was the third largest on record, a sharp reversal after having just hit a record high the previous day with a gain of 3,191 yen. Triggered by speculation of a postponement of US OpenAI's IPO and a plunge in semiconductor stocks, SoftBank Group fell over 12%. 1 2

NY yen in upper 161 yen range, limited movement on intervention caution The yen in the New York foreign exchange market on the 25th was flat at 161.74-84 yen per dollar. It also traded in the upper 161 yen range in Tokyo on the 26th. While there was a 'risk-on dollar buying' due to heightened tensions in Iran, movement remained small due to caution over yen-buying intervention by the government and BOJ. 3 4 5

BOJ's Tamura suggests neutral rate 'around 2%', continued rate hikes every few months BOJ board member Naoki Tamura on the 26th reiterated the neutral level of the policy rate at 'around 2%' and expressed the view that the basic line is to proceed with gradual rate hikes at a pace of 'once every few months' toward that level. Amid continued rises in prices and wages, he clearly showed a stance of outlining a path for monetary normalization. 6

Finance Minister Katayama states consumption tax cut revenue will not rely on deficit bonds Finance Minister Satsuki Katayama said at a press conference after the Cabinet meeting on the 26th that regarding the revenue sources for consumption tax cuts on food and beverages and refundable tax credits, 'We will never rely on special bonds (deficit bonds) but secure them through reviews of subsidies and special tax measures.' The focus is on securing approximately 5 trillion yen in revenue currently being discussed at the Social Security National Council. 7

Government advisory body recommends 'virtuous cycle of investment and wage hikes', declares escape from deflation The government's Fiscal System Council on the 26th submitted a recommendation to Finance Minister Katayama. It assessed that the Japanese economy is 'emerging from deflation and transitioning from a demand shortage to a supply constraint stage,' and called for the realization of a resilient economy through a virtuous cycle of investment and wage hikes. It also emphasized maintaining fiscal discipline and the importance of a target to reduce the government debt-to-GDP ratio. 8

Micron earnings: sales surge to $41.4 billion, more than 4 times year-on-year US semiconductor giant Micron Technology's fiscal third-quarter 2026 results showed sales reaching $41.46 billion (approx. 6.7 trillion yen), more than quadruple the same period last year. At the same time, it announced multi-year supply agreements totaling about $100 billion, aiming to break the traditional boom-and-bust cycle amid explosive growth in AI memory demand. 9