Roughly $150 billion was erased from Japanese equities in a single session as the Nikkei 225 fell about 2%, with the index sliding further in Tuesday morning trading by another 1% to around 65,647. The selloff came as Japan’s benchmark 10-year government bond yield touched 3% for the first time since 1996, while the yen remained pinned near 160 per dollar despite record intervention spending.
The pressure on Japan’s financial markets intensified after renewed US-Iran military strikes drove Brent crude above $91 per barrel and added to inflation concerns. Tokyo’s technology sector bore the brunt of the bond shock: Tokyo Electron dropped about 4.1%, Lasertec lost 3.1%, and Renesas Electronics declined 3%. Markets are now pricing a roughly 73% probability of a Bank of Japan rate increase this month, while U.S. Treasury Secretary Scott Bessent has publicly suggested Japan needs further tightening.
South Korea’s KOSPI initially fell more than 1%, but recovered to trade just 0.2% lower by late morning as chip stocks rebounded. Samsung Electronics almost erased its early decline, while SK Hynix reversed to a gain of about 2%, supported by record semiconductor exports and AI-related memory demand.
The macro backdrop includes a U.S. 10-year Treasury yield climbing toward 4.78%, its highest since early 2025, after Fed Chair Kevin Warsh used Jackson Hole to reinforce his willingness to tighten policy if inflation fails to ease. Analysts note that unexpectedly strong U.S. labor data could now be treated negatively by markets because it would strengthen the case for a September rate increase.
For crypto markets, the key question is whether this stress spills into global liquidity conditions. Rising global yields, a weakening yen, geopolitical tension, and tighter monetary policy expectations could pressure risk assets broadly — including Bitcoin and XRP — even though these assets are not directly tied to Japanese equities.
