Nikkei 225 Drops 3.85% on June 8 After Hitting Record High…

The Nikkei 225 rose modestly through the first four trading days of the week, reaching an all-time high of 68,402.13 on June 3 amid AI-related buying, before closing the prior Friday at 66,588.12. The index then fell sharply on June 8 to 64,024.60, down 3.85%, tracking a global tech selloff. Net movement for the period reflected gains from semiconductor strength offset by the late correction driven by U.S. data and yields.

Executive Summary

The Nikkei 225 advanced through the opening sessions of the week, climbing from 66,329.50 on May 29 to a record close of 68,402.13 on June 3 before easing to 66,588.12 on June 5. The index then declined 3.85% on June 8 to 64,024.60, mirroring weakness in global technology shares. The weekly path featured early gains fueled by AI demand and a weaker yen, followed by a sharp reversal tied to higher U.S. yields and geopolitical tensions.

Weekly Drivers

AI and semiconductor demand supported gains early in the week, with Tokyo Electron and Advantest among leaders.
U.S. jobs data reinforced expectations for higher Federal Reserve rates, lifting Treasury yields and pressuring equities globally.
Geopolitical concerns, including tensions involving Iran and Israel, added to risk-off sentiment by week's end.
The yen remained near multi-decade lows, providing support for exporters throughout the period.

Sectors & Breadth

Technology and semiconductor-related shares drove the mid-week advance but led the June 8 decline, with names such as Kioxia, Murata Manufacturing, and SoftBank Group posting notable losses. Broader participation was limited, as the rally and subsequent pullback centered on a narrow group of growth-oriented names. Defensive and financial sectors showed relative resilience amid the volatility.

What to Watch

Upcoming U.S. inflation and retail sales data for implications on global yields and risk appetite.
Bank of Japan policy signals and any comments on yen intervention.
Corporate earnings from major exporters and technology firms.
Developments in U.S.-China trade relations and Middle East geopolitics.

Capital-Flow Context

Foreign investor positioning remained a key support earlier in the week, with inflows into Japanese equities tied to the AI theme and currency tailwinds. The weaker yen continued to enhance the appeal of Japanese assets for overseas portfolios. Southbound flows from regional investors and passive index rebalancing provided additional backdrop, though positioning data suggested some profit-taking on the June 8 decline.