Semiconductors Take the Nikkei to a Two-Month Low
The Nikkei 225 fell 3.95% on Tuesday to 62,364.92, its lowest close since May 21, as a global semiconductor sell-off swept through Tokyo. The broader TOPIX held up comparatively better, finishing 2.52% lower at 3,963.59 — a gap that tells the day’s story: this was a chip-and-machinery rout, not an indiscriminate liquidation. The move tracked a broad global decline in technology and semiconductor shares, while the US handoff was deceptively calm — the S&P 500 closed Monday essentially flat at 7,413.18 (+0.02%) even as US chipmakers sold off hard. S&P futures drifted 0.14% lower during Tokyo hours.
Volatility confirmed the stress. The Nikkei Volatility Index jumped 8.73 points to 41.14, its 97th percentile over the last 872 sessions. The yen offered no cushion: USD/JPY held firm at 163.84 (+0.14%) as investors weighed the possibility of a Federal Reserve rate hike.
Chips Down Double Digits; Retail and Autos Bought
Within our fixed 95-name large-cap universe, the damage in semiconductors was uniform and heavy — notably on unremarkable volume (roughly 1x 20-day averages), consistent with a repricing rather than a panic unwind. Memory chipmaker Kioxia fell 18.33% to its daily limit low on reports of intensifying Chinese competition in memory and broader skepticism about returns on AI capital spending.
| Decliners | Close move | Gainers | Close move |
|---|---|---|---|
| Lasertec (6920) | -14.05% | Fujitsu (6702) | +6.26% (2.6x volume) |
| Disco (6146) | -12.37% | Nitori (9843) | +4.15% |
| Murata (6981) | -11.71% | Fast Retailing (9983) | +3.33% |
| Tokyo Electron (8035) | -10.96% | Seven & i (3382) | +3.33% |
| Advantest (6857) | -10.11% | Pan Pacific Intl (7532) | +3.33% |
The sector picture (TOPIX-17 ETF proxies, which may deviate slightly from official indices) shows real rotation rather than a one-way tape: 7 of 17 sectors actually advanced. Electric & Precision fell 6.68% and Machinery 5.21%, while Retail gained 2.36% and Autos & Transport Equipment 1.49% — Toyota rose 1.43% and Sony 2.46%. Domestic-demand defensives were the hiding place. Financials and megacaps offered none: MUFG lost 3.63% and SoftBank Group 4.43%.
Positioning: The Selling Was Not Led by Shorts
Our daily signature, the TSE short-selling ratio, came in at 35.2% of total trading value (27.8% under the price rule plus 7.4% unrestricted) on heavy turnover of JPY 10.00 trillion. Elevated in absolute terms — a defensive tape — but notably in the lower third of the last eight sessions’ 31.9%–43.8% range and below the 38.4% average. On a near-4% down day, that reads as long liquidation rather than aggressive fresh shorting.
The lagged positioning data leans the same way. Among Tuesday’s JPX large short-position disclosures (regulatory filings, reported with a lag — not today’s selling), the biggest change was a 5.79pp reduction in disclosed shorts on the Nikkei 225 Leveraged ETF (1570). Squeeze costs remain broad: 501 of 1,139 JSF loanable issues carried a gyaku-hibu premium charge as of Monday, an extra daily cost borne by short sellers on 44% of the loanable universe. Monday’s JSF standardized-margin data also showed leveraged-long demand building into bank weakness — MUFG’s margin-loan balance jumped by roughly 2.04 million shares on the day — while Toyota’s stock-lending balance (shares borrowed for shorting) rose by 75,800 shares.
Weekly Flows
For the week of July 13–17 (JPX investor-type data, published with a lag — these are not today’s flows), foreign investors were net buyers of JPY 0.52 trillion in TSE Prime, while individuals net sold JPY 0.10 trillion. The MOF’s cross-border series for July 12–18, compiled on a different reporting basis, showed foreigners marginally net selling JPY 0.08 trillion of Japanese equities — a mixed cross-check, so treat the foreign-buying signal as tentative. Retail leverage eased slightly: Tokyo+Nagoya margin buying stood at JPY 6.48 trillion as of July 24 (-0.23T on the week) against JPY 0.73 trillion of margin selling.
Rates, the Yen and the BOJ
JGBs caught a safety bid into the sell-off: as of Monday’s MOF close, the 10-year yield eased 3.7bp to 2.778%, the 2-year 1.8bp to 1.513%, and the 20-year 2.5bp to 3.665%. The Bank of Japan meets Thursday–Friday with an Outlook Report, and is widely expected to hold the policy rate at 1% while it assesses the June hike — leaving guidance on the next move as the live variable, with the yen at 163.84 keeping the pressure on. Tokyo’s July CPI flash lands the same Friday morning at 08:30 JST.
What to Watch
- BOJ decision and Outlook Report (Jul 30–31), plus Tokyo July CPI flash Friday 08:30 JST — any hawkish shading with USD/JPY near 164 would test an already stressed tape.
- The short-selling ratio — a push back toward its 38.4% eight-session average would signal shorts re-engaging after Tuesday’s long-driven decline; a further slide would suggest the de-risking is running its course.
- Nikkei VI above 40 — at the 97th percentile, either volatility compresses quickly or the chip-led repricing has another leg.
Disclaimer: This is an information and analysis publication, not investment advice. See our Methodology for data sources, standards, and our corrections policy.