Japan's Nikkei index of the Tokyo Stock Exchange dropped over 3% in morning trading Monday (June 3), as investors locked in profits on large-cap technology stocks after similar U.S. shares tumbled late last week on expectations that the Federal Reserve will raise interest rates.
According to data from the Tokyo Stock Exchange, the benchmark Nikkei fell 3.2% to 28,400 points in the morning session, marking the sharpest decline since the start of 2026. Shares of leading tech companies such as Tokyo Electron, Advantest, and SoftBank Group each fell between 4% and 6%.
The decline came against the backdrop of Wall Street's worst session in months on Friday (May 31), when the Nasdaq dropped 3.8% on news that the Fed could raise rates by 0.5% in July to curb inflation. Asian stock markets faced similar pressure, with Hong Kong's Hang Seng down 2.1% and South Korea's Kospi losing 2.5%.
Analysts said a risk-averse sentiment is sweeping the market, particularly in the interest rate-sensitive technology sector. However, the Nikkei's decline is believed to have already priced in much of the bad news, and the market may recover in coming sessions if no further negative signals emerge from the U.S.
