Nikkei 225 Poised for Further Decline Amid Rate Hike Bets

The Nikkei 225 Index is poised to drop further as investors bet on rate hikes from both the Federal Reserve and the Bank of Japan.

Traders are predicting that the Fed will increase interest rates by between 3.75% and 4%, its highest level in a year, while the BoJ is expected to hike rates by 25 basis points to 1.25%.

The rising bond yields in both countries are also putting downward pressure on the index, with the ten-year yield in Japan reaching 3.03%, its highest level in decades.

In addition, AI slowdown jitters are affecting Japanese cyclicals and semiconductors, with Tokyo Electron and Advantest stocks rising today despite SoftBank and Kioxia falling.