Nikkei 225 Plunges as BoJ Hike Odds Rise Amid US-Iran Tensions

The Nikkei 225 Index has been under pressure in recent days, falling to 65,361 from its high of 69,577 earlier this month. The decline follows a report showing Japan's industrial production rose 3.6% YoY and retail sales increased by 4% in July.

These numbers are higher than expected and suggest the Japanese economy is doing relatively well. However, investors are now predicting that the Bank of Japan will hike interest rates later this year, partly explaining why Japan bond yields have remained elevated.

The Nikkei 225 Index is also reacting to developments on the US-Iran conflict. The US launched limited strikes overnight, hitting Iranian rocket launchers near the Strait of Hormuz, which may lead to higher crude oil prices and hurt Japanese companies relying on imports from that region.