On the Tokyo stock market on the 15th, the Nikkei Stock Average closed at ¥64,425.95, down 4.9% (market data). The Japan Times reported a “5% drop,” and the Mainichi Shimbun reported that it fell to the ¥64,000 range for the first time in a month, the third-largest drop on record. The losses widened during trading: the TV Asahi network reported a fall of more than ¥2,000 at one point, the Asahi Shimbun more than ¥2,700, and the Mainichi Shimbun ¥3,000. The U.S. consumer price index came in above forecasts (TV Asahi network), and rate-hike expectations strengthened again (Asahi Shimbun). New York stocks fell for a second day, the Nasdaq dropped 511 points, and tech stocks were sold (NHK and others). Reuters reported that U.S. producer prices for September posted their biggest gain in four and a half years. The selling centered on AI-related stocks. Reuters reported that shares and bonds of CoreWeave, which runs data centers for AI, fell, and that concern about AI-related debt is growing. Taiwan's TSMC posted a record net profit for the July–September quarter, up 68.7% (Jiji Press), but English-language dispatches said it failed to ease worries about an AI bubble. Bank of Japan Policy Board member Koeda said in a speech on the 15th that there is no need to be “overly cautious” about raising rates (NHK, Asahi Shimbun, Mainichi Shimbun). NHK reported that the yen's exchange rate rose after these remarks and other factors.
If prices do not come down, U.S. interest rates will stay high, making it harder to support the high share prices of AI-related stocks. Tokyo's market has a large weighting in chip-related stocks, so the U.S. selling hit it directly. The Bank of Japan board member's favorable remark on raising rates also became a factor moving the outlook for interest rates. Still, whether the main cause of the fall was prices or AI-related worries has not yet been sorted out.
If you hold investment trusts or stocks, this was a day when the value of your holdings moved sharply. Before deciding to buy or sell in a hurry, check the close of the U.S. market on the 15th and the opening of the Tokyo market on the 16th. If you are investing regularly through the new NISA or the like, there is no need to rush to change the amount or the dates. Mortgage rates are tied to the outlook for Bank of Japan rate hikes.
The plunge is a correction after AI-related share prices had run up too far ahead. If the outlook for prices and interest rates changes, there are phases when shares struggle to recover, and the reasons for selling make sense.
It is too early to be pessimistic about the whole market from a single day's drop. TSMC's profit is a record, and corporate earning power has not suddenly fallen. After a big drop, price swings tend to get rougher.
Today's number is “4.9%.” That is the one-day drop. There are three things to watch: whether the Tokyo market stops falling on the 16th, how the U.S. market on the 15th closes, and what words come out about the outlook for Bank of Japan rate hikes. Intraday drops differ from report to report because the times differ, so the closing price is the surest check.
TV Asahi network · NHK · Asahi Shimbun · Mainichi Shimbun · Jiji Press · The Japan Times · Reuters (Oct. 15. The closing price and drop are market data, the third-largest drop is from the Mainichi Shimbun only, the 511-point fall is from NHK and others, and Koeda's remark is from NHK, the Asahi Shimbun and the Mainichi Shimbun)
Nikkei Stock Average Plunges Nearly 5% to the ¥64,000 Range; Hot U.S. Prices Revive Rate-Hike Bets, AI and Chip Stocks Sold
The drop reached ¥3,000 at one point during trading. The Nasdaq's 511-point fall spilled over into Tokyo, and a Bank of Japan Policy Board member said there is no need to be “overly cautious” about raising rates.
On the Tokyo stock market on the 15th, the Nikkei Stock Average closed at ¥64,425.95, down 4.9% (market data). The Japan Times reported a “5% drop,” and the Mainichi Shimbun reported that it fell to the ¥64,000 range for the first time in a month, the third-largest drop on record. The losses widened over the course of trading: the TV Asahi network reported a fall of more than ¥2,000 at one point, the Asahi Shimbun more than ¥2,700, and the Mainichi Shimbun ¥3,000. The trigger was U.S. prices. The U.S. consumer price index came in above forecasts (TV Asahi network), and rate-hike expectations strengthened again (Asahi Shimbun). New York stocks fell for a second day, the Nasdaq dropped 511 points, and tech stocks were sold (NHK and others). Reuters reported that U.S. producer prices for September posted their biggest gain in four and a half years.
The selling centered on AI-related stocks. Reuters reported that shares and bonds of CoreWeave, which runs data centers for AI, fell, and that concern about AI-related debt is growing. Taiwan's TSMC posted a record net profit for the July–September quarter, up 68.7% from a year earlier (Jiji Press), but English-language dispatches said it failed to ease worries about an AI bubble. Bank of Japan Policy Board member Koeda said in a speech on the 15th that there is no need to be “overly cautious” about raising rates (NHK, Asahi Shimbun, Mainichi Shimbun). NHK reported that the yen's exchange rate rose after these remarks and other factors. Dollar-yen stood at around ¥158.09 in the early hours of the 16th (market data). The results of the U.S. market on the 15th will come out after this paper is published. Whether the main cause of the fall was prices or AI-related worries has not yet been sorted out.