The Nikkei Stock Average plunged on September 8, closing at 65,269.33, down 1,130.51 points (1.70%) from the previous trading day. It was the first decline in three sessions, with the drop exceeding 1,100 points. As the yen surged to the 152 level per dollar in the foreign exchange market, selling spread across export-oriented stocks, particularly automakers and electronic component manufacturers. The TOPIX also finished lower, down 75.47 points (1.83%) at 4,050.33.

On the Tokyo Stock Exchange Prime Market, approximately 74% of all listed stocks—165 issues—declined, while only 59 issues advanced. Trading volume reached 2.1001 billion shares, with turnover totaling ¥8.4774 trillion (approximately $55.0 billion). By sector, glass and ceramics, transportation equipment, and electrical machinery declined, while information and communications, oil and coal products, and mining advanced.

Yen surge hammers export stocks

U.S. markets were closed on September 7 for the Labor Day holiday. Major European markets were mixed, leaving traders with few catalysts. The Nikkei opened at 65,843.69, down 556 points. After the index had climbed nearly 2,200 points over the prior consecutive gains, short-term profit-taking led the early decline.

After the initial wave of selling subsided, the index pared losses and briefly returned to positive territory in mid-morning trading, supported by buying in select AI-related names. However, as the yen rapidly strengthened against the dollar in the foreign exchange market, concerns over deteriorating export profitability intensified, reigniting selling in automakers and electronic component manufacturers. The index fell back into negative territory in mid-afternoon and extended losses into the close.

Rising uncertainty over the Middle East also cooled investor sentiment. With U.S. markets set to reopen tonight, traders refrained from aggressive positioning. From a technical standpoint, the index fell below its 25-day moving average, which may have led market participants to view that level along with the 75-day moving average as overhead resistance.

Semiconductor names drag down the index

Tokyo Electron (8035.T) was the biggest contributor to the decline, single-handedly shaving approximately 185 points off the Nikkei. The stock closed down ¥1,840 at ¥54,000. Advantest (6857.T) fell ¥680 to ¥33,800, accounting for roughly 164 points of downside pressure. Other notable decliners included TDK (6762.T), Ibiden (4062.T), Kioxia Holdings (285A.T), and Murata Manufacturing (6981.T), with semiconductor and electronic component names posting conspicuous losses.

Semiconductor stocks had been buoyant through the previous session, riding on the Philadelphia Semiconductor Index (SOX) rising more than 3% in U.S. markets late last week. However, on this day, the sector was pressured by the yen’s appreciation and profit-taking, with gains evaporating into the close. Recruit Holdings (6098.T), Kyocera (6971.T), Fanuc (6954.T), and Fast Retailing (9983.T) also weighed on the index.

On the upside, SoftBank Group (9984.T) was the top contributor, rising ¥339 to ¥6,556 and adding approximately 272 points to the Nikkei. Domestic-demand names advanced, including Nitori Holdings (9843.T), KDDI (9433.T), Konami Group (9766.T), Nexon (3659.T), Aeon (8267.T), and Oriental Land (4661.T).

Notable movers

Among the biggest decliners, Disco (6146.T) plunged ¥3,260 to ¥53,890, while Taiyo Yuden (6976.T) fell ¥778, Nitto Denko (6988.T) dropped ¥200, and Fujikura (5803.T) declined ¥158. In transportation equipment, Toyota Motor (7203.T) fell ¥127.5 to ¥2,968.5, and Honda (7267.T) dropped ¥84.5 to ¥1,610.5, with automakers—directly exposed to yen appreciation—posting notable declines.

Among gainers, Otsuka Holdings (4578.T) rose ¥70, Nippon Ham (2282.T) climbed ¥133, Taisei Corporation (1801.T) advanced ¥320, and Itochu (8001.T) added ¥12.5, as select domestic-demand and defensive names attracted buying.

Market participants’ views

Market participants voiced caution over the impact of the yen’s sharp move on export companies’ earnings outlooks. With the yen strengthening by roughly ¥2 against the dollar compared to around 3:30 p.m. the previous day, concerns spread that deteriorating export profitability would pressure earnings. Meanwhile, some noted that the Nikkei had reclaimed its 25-day moving average at the close of the previous session, suggesting the short-term correction may have run its course—but selling dominated from the opening bell nonetheless.

Ahead of tonight’s resumption of U.S. trading, many market participants believe developments in the Middle East and the direction of U.S. equities will determine the near-term trajectory of the Japanese market. If the yen continues to strengthen, downward pressure is likely to persist, particularly on export-related stocks.