【September 8】 Nikkei stock average closes at a 1,130 point decline at its low. Will there be a rebound tomorrow or another drop?

On September 8, the Nikkei Stock Average finished at 65,269.33, down 1,130.51 points from the previous close.

The decline rate was 1.70%.

The opening price was 65,843.69, the high was 66,791.84, and the low was the same as the closing price at 65,269.33.

If you look only at the numbers, it appears to be a “significant loss day,” but what I consider most important in today’s market is not the magnitude of the decline.

Although it rose as high as 66,791.84, it was pushed back by more than 1,500 points and ultimately finished trading at the day’s low.

This price movement is extremely important when considering tomorrow’s market.

How to view today’s Nikkei average

On the previous day, September 7, the Nikkei had risen to 66,399.84.

And today, it rose again to 66,791.84 in the morning.

At one point it was about 392 points above the previous day’s close, raising the possibility that the gains might continue from yesterday.

However, it then stalled.

From the high to the close, it fell about 1,522 points.

In other words today,

it was not “weak from the morning,” but “bought then sold.”

This is a very important distinction.

Despite buying with expectations of gains, selling absorbed that buying and became dominant.

In the short term, it suggests there were quite a few investors looking to lock in gains at higher levels.

Among the Nikkei 225 stocks, 59 were higher and 165 were lower.

Not only the index but a wide range of stocks saw selling pressure spread.

Three factors that created today’s decline

① Rapid yen appreciation

One of today’s major drivers was the exchange rate.

The dollar/yen briefly moved to the 152 yen level or lower, representing yen strength.

In the past few days, it has moved sharply toward the yen appreciation from near 160 yen.

Behind this is expectations for an additional rate hike by the Bank of Japan.

In the market, anticipation of further rate hikes has intensified ahead of the BOJ Policy Meeting on September 17–18.

Furthermore, the July real wage in Japan rose 2.4% year over year, supporting expectations of monetary normalization.

For Japanese stocks, this yen appreciation is a non-negligible factor.

For companies with high overseas sales like automobiles and electronics, a stronger yen weighs on profits.

Therefore, when looking at the Nikkei average going forward,

you cannot look at the Nikkei average alone.

Will the dollar/yen stop around the 153 yen level?

Or will the yen strengthen further to 152, 151?

This will greatly influence the direction of stock prices.

② Semiconductor stock declines pushed the index down hard

In today’s decline, the impact of semiconductor-related stocks, which have a high contribution to the index, was substantial.

Just two names, Tokyo Electron and Advantest, dragged the Nikkei by about 349 points.

This is very important.

The Nikkei Average is not an index where 225 stocks move evenly.

Because high-priced stocks can have a strong influence, depending on semiconductor stock movements, the index can move more than the broader market.

On September 7, the previous day, buying in Japanese semiconductor-related stocks was sparked by the rise in U.S. semiconductor stocks.

As a result, today it was easier to see profit-taking selling.

Therefore, tomorrow,

it would be noteworthy whether there is renewed buying in major semiconductor stocks like Tokyo Electron and Advantest

to watch for.

③ Rising crude oil and Middle East tensions

Another factor not to be ignored is crude oil.

In response to tension in the Middle East, Brent crude rose toward 100 dollars per barrel at one point.

Oil price increases are generally negative for Japanese stocks.

Japan is a net energy importer.

If high crude oil prices persist, they not only raise corporate costs but also strengthen domestic inflationary pressures.

Additionally, there is a global vigilance regarding rising interest rates.

In other words, the market tends to anticipate a chain reaction:

Oil price rise → inflation concerns → rate hike concerns → downward revision of stock valuations

Today’s decline in the Nikkei was not simply profit-taking;

yen appreciation + oil price rise + rate hike concerns

three factors simultaneously weighing on prices should be viewed as part of the decline.

So, what will happen on September 9 tomorrow?

From here, that is the key question.