Nikkei 225 Plunges 2,563 Yen on US Rate Hike Fears, June 08

The Nikkei 225 index fell 2,563.52 yen to 64,024.60 on June 8, closing down 3.8% after a shock US employment report triggered rate hike expectations. The decline marks the fourth-largest drop in trading history. AI and semiconductor stocks led the selloff as investors fled growth-focused equities. Rising interest rates make future profits less valuable, pressuring high-growth companies.

US Jobs Data Sparks Global Selloff

On June 5, the US reported 172,000 new jobs in May, beating forecasts and raising expectations for Federal Reserve rate hikes. The Philadelphia Semiconductor Index (SOX) fell 10% that day. This flow directly hit Tokyo on June 8, where the Nikkei dropped as much as 3,100 yen intraday. The US dollar strengthened and Treasury yields rose across all maturities as investors repriced rate expectations.

AI Stocks Face Largest Losses

SoftBank Group (9984.T), Tokyo Electron (8035.T), and Advantest (6857.T) suffered the steepest declines, dragging the broader index lower. These high-growth tech names had surged on data center demand but faced sharp profit-taking. Growth stocks are valued on future earnings discounted at current interest rates. Higher rates increase the discount rate, cutting valuations immediately. The selloff reflects concern that AI enthusiasm may have pushed valuations too far.

Geopolitical Risk Adds Pressure

Early on June 8, Iran launched missiles at Israel, sending crude oil futures up 2% in after-hours trading. WTI crude rose sharply on the geopolitical shock. The combined effect of rate hike fears and Middle East tensions created a risk-off environment. Investors moved away from speculative bets and toward defensive positions. The Tokyo market could not escape the dual headwinds from Washington and Tehran.

What Comes Next

SMD Asset Management expects the Federal Reserve to raise rates 25 basis points in September and December 2026, but not pursue aggressive tightening. Key data to watch include May US consumer prices, the SpaceX IPO, and Micron Technology earnings. If these show stability, the AI and semiconductor selloff may prove temporary. However, if rate hikes accelerate or corporate guidance weakens, the decline could extend further into summer.

Final Thoughts

The Nikkei’s 3.8% drop reflects a sharp repricing of growth stocks on US rate hike fears. With Meyka’s analysis showing AI and semiconductor valuations compressed by rising discount rates, investors should monitor Fed communications and earnings guidance closely before re-entering these sectors.

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