Japan Economic News ·
Nikkei Average Plunges 2,566 Points to 2-Month Low on Broad Semiconductor Sell-off
On the Tokyo market on the 28th, the Nikkei average plunged 2,566 points from the previous day to a two-month low. The drop was triggered by a decline in US semiconductor stocks and reports of China's push for domestic production, leading to widespread selling of AI-related stocks. Meanwhile, Prime Minister Takaichi has decided to reduce the consumption tax rate on food to 1%, intensifying concerns about fiscal deterioration and putting pressure on the yen to weaken and interest rates to rise. The Bank of Japan is expected to keep interest rates unchanged at its meeting on the 31st, but focus will be on Governor Ueda's comments and the quarterly outlook. The yen-dollar rate is stuck in the upper 163 range. On corporate earnings, Mitsubishi UFJ Securities and SCREEN HD announced profit increases.
12 sources2 min read
Nikkei Average Plunges 2,566 Points to 2-Month Low on Broad Semiconductor Sell-off Closing at 62,364 yen, down 2,566 yen from the previous day, it marked a two-month low. Amid reports of China's efforts to localize semiconductor manufacturing equipment, AI and semiconductor stocks such as Advantest and Tokyo Electron fell broadly. The index has dropped about 10,000 yen from its all-time high of 72,366 yen. 1234
Prime Minister Takaichi Plans to Cut Consumption Tax on Food to 1%, Raising Fiscal Concerns Prime Minister Takaichi has decided to reduce the consumption tax rate on food to 1% for a limited period of two years starting April 2027. Market participants are wary that this could lead to a weaker yen and higher interest rates, heightening concerns over fiscal deterioration. 5
Finance Minister Katayama: Government-BOJ Relationship 'Normal and Smooth', No Cap on Bond Issuance Finance Minister Satsuki Katayama emphasized at a Reuters event that the relationship between the government and the Bank of Japan is normal and smooth, indicating a stance of respecting the BOJ's independence. She stated that no upper limit will be set on the issuance of government bonds for the next fiscal year's budget at this point, and expressed a policy of gaining confidence through dialogue with the market. 67
BOJ Expected to Hold Rates in July, Focus on Timing of Additional Hike The Bank of Japan is expected to keep the policy rate at 1.00% at its policy meeting on the 31st. The market will seek clues on the timing of an additional rate hike within the year from Governor Ueda's press conference and the quarterly outlook report. Mr. Sato, who is close to Prime Minister Takaichi, will participate for the first time as a new monetary policy board member. 8
Dollar-Yen Stuck in Upper 163 Range Ahead of Japan-U.S. Meetings In the Tokyo market on the 28th, the dollar-yen pair moved little in the upper 163 range. The market is awaiting direction ahead of the Bank of Japan and U.S. Federal Open Market Committee meetings. Reaction to Finance Minister Katayama's comments was limited. 9
Mitsubishi UFJ Securities' April-June Net Profit Increases 2.8 Times on Strong Bond Sales Mitsubishi UFJ Securities Holdings' net profit for the April-June quarter of fiscal 2026 was 24.8 billion yen, 2.8 times higher than the same period last year. Sales of yen-denominated bonds grew due to the rise in long-term interest rates, and demand for foreign bonds remained solid despite the yen's weakness. Trading and M&A also performed well. 1011
SCREEN HD's Net Profit Up 25% on Strong AI Semiconductor Demand SCREEN Holdings revised upward its net profit forecast for the fiscal year ending March 2027 to a 25% increase. Demand for semiconductor manufacturing equipment is expanding for AI applications. 12
Japan Economic News
Compact morning updates on key Japanese economic news, including Nikkei, exchange rates, and monetary policy.