Nikkei Average Plunges 2,134 Points, AI and Semiconductor Stocks Collapse Amid Rising Rates and Middle East Tensions

Nikkei Average Plunges 2,134 Points, AI and Semiconductor Stocks Collapse Amid Rising Rates and Middle East Tensions On the 19th, the Nikkei average on the Tokyo stock market fell 3.16% from the previous day to 65,326 yen, marking a second consecutive decline, with the drop temporarily exceeding 2,300 points. Amid falling U.S. stocks and concerns over rising global interest rates, AI and semiconductor-related stocks such as SoftBank Group and Kioxia led the sell-off, and more than 70% of stocks on the Tokyo Stock Exchange Prime Market declined. 1234

Long-Term Interest Rates Briefly Hit 2.945%, a 30-Year High, Then Fall to 2.885% After long-term interest rates briefly reached 2.945% on the 18th, a level not seen in about 30 years, they fell to 2.885% on the 19th due to a decline in U.S. long-term rates and a pullback from the rapid rise. Expectations of an early rate hike by the Bank of Japan, concerns over fiscal deterioration, and inflation worries stemming from higher oil prices are behind the upward pressure. 567

Global Long-Term Interest Rates at Record Highs, Driven by Fiscal Concerns and AI Investment Corporate Bond Issuance The yield on 30-year U.S. Treasuries reached a level not seen in about 19 years, while 10-year yields in Germany and France also rose to 15-year and 18-year highs, respectively. In addition to concerns over fiscal deficits in various countries, increased corporate bond issuance by U.S. tech companies to fund AI investments is prompting selling of government bonds. 5

Yen Trades in Upper 159 Range, Upside Limited as U.S. Rates Ease, Intervention Caution Persists In the Tokyo foreign exchange market on the 19th, the dollar-yen pair fell to the upper 159 range. A decline in U.S. long-term interest rates and President Trump's announcement of a temporary suspension of tariffs on Canada contributed to dollar weakness. Meanwhile, gains toward the 160 level are limited due to caution over coordinated Japan-U.S. intervention, and the market continues to lack clear direction. 8910

Japanese Companies' April-June Earnings Beat Expectations at Highest Level in 5 Years, Reflecting Price Hikes According to Bloomberg data, the proportion of TOPIX constituent companies that beat profit expectations in the April-June quarter reached 71.3%, the highest level in five years. Strong earnings, which had been concentrated in AI-related sectors, have spread across a wide range of domestic and overseas demand sectors thanks to the penetration of price hikes, and profit margins reached 9.3%, the highest since 1993. 11

SK Hynix Announces Share Buyback Worth 4.5 Trillion Yen, Expanding Shareholder Returns Amid AI Boom South Korean semiconductor giant SK Hynix announced it will buy back shares worth 40 trillion won (approximately 4.55 trillion yen). The move aims to stabilize the stock price, which fell more than 50% in two months, and the company also set a target of returning more than 50% of cumulative free cash flow for 2025-27 to shareholders. 12