Thursday in Tokyo was two markets in one. The Nikkei 225 closed down 0.93% at 65,683.26, paring intraday losses that reports put at more than 2%, as semiconductor heavyweights and SoftBank Group sold off ahead of Friday’s U.S. nonfarm payrolls. Yet the TOPIX proxy (1306 ETF) rose 0.57%, and 15 of 17 sector ETF proxies advanced. This was not a risk-off day so much as a rotation day: money came out of the AI-and-chips trade after a strong run and went into pharmaceuticals, foods, autos and financials. The yen was quiet at 157.83 per dollar, little moved after recent joint U.S.-Japan intervention, and the Nikkei Volatility Index eased 3.29 points to 29.78 — still elevated at the 82nd percentile of the last 879 sessions.
The Tape
| Instrument | Close (Aug 6) | Change |
|---|---|---|
| Nikkei 225 | 65,683.26 | -0.93% |
| TOPIX (1306 ETF proxy) | 423.70 | +0.57% |
| USD/JPY | 157.83 | +0.09% |
| Nikkei VI | 29.78 | -3.29 d/d |
| 10y JGB (MOF, Aug 5) | 2.813% | -3.5bp d/d |
| S&P 500 (Aug 5 US close) | 7,723.55 | -0.17% |
Semis Sold, Everything Else Bought
The damage was concentrated. Tokyo Electron fell 5.50% to 55,330, Advantest lost 2.34%, and within our fixed 95-name large-cap universe Lasertec dropped 7.18%, Murata 5.21% and TDK 4.35%. SoftBank Group gave back 4.41% to 5,695 even after reporting fiscal first-quarter net income that beat expectations — a telling sign that the market is now marking down anything AI-adjacent. Context matters: the Electric & Precision sector proxy came into today up 7.9% over five days, and Steel & Nonferrous — Thursday’s worst sector at -4.00% — was up 13.9% over the same stretch. Today looks like profit-taking on winners, not new bad news.
The other side of the ledger was broad. By TOPIX-17 ETF proxies (which can deviate slightly from official sector indices), Pharmaceuticals led at +2.64% — Astellas gained 6.00% and Eisai 3.78% — followed by Foods at +2.40%, where Kao surged 12.83% on 4.1x its 20-day average volume, the day’s standout mover. Autos & Transport Equipment rose 2.36%, with Toyota up 2.37%. Sony added 1.71%, Fast Retailing climbed 2.63%, MUFG gained 0.93%, and Bandai Namco jumped 10.85% on heavy volume.
Positioning: Short Selling Eases Off Recent Highs
Our daily signature stat: short sales were 39.9% of total TSE trading value Thursday (31.9% under the price rule plus 8.0% unrestricted), on turnover of ¥10.34 trillion. That sits at the bottom of the last four sessions’ 39.9%–45.4% range, versus a 43.1% average — so at the margin, traders were less defensive today than they have been recently, consistent with the broad sector advance beneath the headline Nikkei decline. That said, roughly 40% is still meaningful hedging activity, and short-squeeze costs remain widespread: as of Wednesday’s JSF data (today’s is not yet published), 484 of 1,123 loanable issues carried a gyaku-hibu premium — an extra daily cost short sellers are paying.
Wednesday’s JSF standardized margin data showed interesting single-name shifts. SoftBank saw loans for margin buying — leveraged long demand — cut by 393,700 shares while stock lending (shares borrowed for shorting) rose 31,100, a de-risking of the long side before today’s drop. Fast Retailing showed the opposite: stock lending fell 32,200 shares while margin-loan balances rose 27,400, and the stock rallied today. Toyota saw both sides build.
Separately, JPX published 861 large disclosed short-position filings across 602 issues. These are lagged regulatory position reports, not today’s selling: the largest aggregates were ReYuu Japan at 8.8% of shares outstanding and Rasa Industries at 8.2%, while the biggest changes versus prior reports were Silicon Studio at -1.82pp and Mitsui E&S at +0.90pp.
Weekly Flows
For the week of July 27–31 (JPX data, published with a lag — these are not today’s flows), foreign investors were net buyers of TSE Prime equities to the tune of ¥0.37 trillion, while individuals net sold ¥0.49 trillion. A caveat: MOF’s cross-border securities data for the week of July 26–August 1, compiled on a different reporting basis, showed foreigners as net sellers of ¥0.39 trillion of Japanese equities — the two series disagree on direction this week, so treat the foreign-flow signal as mixed rather than clean. Retail leverage was trimmed: margin buying balances (Tokyo+Nagoya, as of July 31) fell ¥0.27 trillion on the week to ¥6.20 trillion, against ¥0.73 trillion of margin selling.
Rates, the BOJ and the Yen
JGBs rallied modestly at Wednesday’s MOF marks: the 10-year at 2.813% (-3.5bp), the 30-year at 3.966% (-2.4bp), with the 2-year steady at 1.569%. The Bank of Japan held its policy rate at 1.0% — still the lowest in the G7 — with market chatter pointing to a possible September move. A new political wrinkle emerged Thursday: a ruling-party executive floated tapping the BOJ’s ETF holdings to fund a proposed sales-tax cut, a discussion worth monitoring for any equity supply implications. USD/JPY at 157.83 remains pinned in a tight range after intervention.
What to Watch
- U.S. nonfarm payrolls (Friday): today’s de-risking was explicitly framed around this print; S&P futures at 7,754.25 (+0.06%) suggest a calm setup for now.
- Whether the momentum unwind extends: Steel & Nonferrous (+13.9% over 5 days) and Electric & Precision (+7.9%) were today’s laggards — one more heavy session would turn profit-taking into a trend change.
- BOJ headlines: September rate-hike speculation plus the ETF-holdings debate are now two separate policy threads that can move both the yen and the index.
Disclaimer: This is an information and analysis publication, not investment advice. See our Methodology for data sources, standards, and our corrections policy.