Nikkei Slips Again; Tech Stocks Remain Under Pressure

Japanese stock markets opened lower in Tuesday's trading (Sept 15). The Nikkei 225 fell 302.62 points, or approximately 0.48%, to 63,190.37, extending the downward pressure seen after the index closed at 63,492.99 in the previous session.

Market sentiment remains weighed down by the weakness in global technology stocks. Wall Street closed lower on Monday due to a sell-off in semiconductor stocks and concerns regarding artificial intelligence investments; consequently, the pressure on Japanese tech stocks remains a key focus for investors.

Additional pressure stems from high US bond yields. The 10-year Treasury yield briefly breached 5% before settling around 4.96%. Markets now anticipate a very high probability of a Federal Reserve interest rate hike this week, prompting investors to exercise caution regarding risk assets.

Japanese investors are also awaiting the Bank of Japan's (BOJ) decision. The BOJ is expected to raise interest rates by 25 basis points to 1.25%, the highest level in over three decades. The prospect of a rate hike keeps stocks sensitive to funding costs and yen fluctuations potentially volatile.

The Nikkei began the session with a defensive tone as the market grapples with a combination of pressures: tech stock weakness, high yields, energy prices, and upcoming decisions from two major central banks. Until the uncertainty surrounding the Fed and BOJ is resolved, the Nikkei is likely to remain volatile, with investors inclined to hold back on aggressive positions.