Nikkei 225 Plunges on Rate Hike Odds and US-Iran Crisis

The Nikkei 225 Index has been under pressure in recent days after investors increased their odds of a Bank of Japan rate hike following strong macro data. The index dropped to 65,325 on Monday, down by 10% from its highest point this year.

The reports showed that Japan's industrial production rose 3.6% YoY and retail sales rose by 4% in July, beating median estimates of a 0.7% decline and 3.2%, respectively. These numbers indicate a relatively strong Japanese economy.

Analysts now predict a Bank of Japan rate hike later this year, which has kept Japan bond yields elevated. The index is also falling due to the latest developments on the US-Iran crisis, with Brent and West Texas Intermediate oil prices potentially rising to $90 and $85 respectively if the situation escalates.