FX.co ★ Japan’s Nikkei Slumps on Hot US Inflation

The Nikkei 225 Index dropped more than 3% toward the 65,000 level on Thursday, extending its losing streak to a sixth consecutive session and hitting a two-week low. The decline followed stronger-than-expected US inflation data, which heightened fears of prolonged higher interest rates.

Japanese shares also tracked a technology-led selloff on Wall Street overnight, as rising borrowing costs clouded the sector’s credit outlook amid heavy investment in artificial intelligence. AI-related names led the downturn in Tokyo, with Kioxia Holdings tumbling 9.1%, Advantest sliding 7.4%, Lasertec dropping 8.8%, SoftBank Group losing 7.8%, and Taiyo Yuden falling 4.5%.

Financials were weaker as well. Banking shares retreated, with Mitsubishi UFJ and Sumitomo Mitsui each down 1.1%, while Mizuho Financial declined 1.8%.

In contrast, domestic data offered a brighter note: core machinery orders, a key gauge of corporate capital expenditure, rose more than expected in August.