Asia Stocks Drop as Japan Tumbles on Stronger Yen – Asia Market Wrap

Asian equities slumped Monday, led by Japanese shares, as rising expectations that the country’s central bank may raise interest rates pushed the yen higher.

The Topix index of Japanese shares fell 3%, the most since March last year. Chip stocks within the benchmark fell, mirroring pressure on AI-related firms observed in the US on Friday, when Nvidia fell 5.6%. Shares in Australia and South Korea also fell, bringing a gauge of regional markets down after three days of gains.

In Japan, economic growth accelerated in the fourth quarter, fueling hopes that the Bank of Japan will hike interest rates for the first time since 2007 as early as this month. Japanese share declines were partly due to the strengthening yen, which normally serves as a headwind for the country’s equities.

The yen extended last week’s 2% surge versus the dollar, its highest weekly gain since July.