Japanese Stocks Slump on Strong Yen and Rate Hike Expectations

Japan's stock market saw a decline on Tuesday, with the Nikkei 225 Index falling 1.7% to close at 65,269 and the Topix Index dropping 1.83% to 4,050.

The yen surged to its strongest level since February, weighing heavily on earnings prospects for Japan's export-focused industries and making Japanese assets more expensive for foreign investors.

Markets were also positioning for an expected Bank of Japan rate hike, backed by strong economic data showing July wages rose at their fastest pace since 1997 and second-quarter GDP growth was revised higher.