Nikkei 225 Suffers Its Biggest Drop of the Month, Closing Down 3.9%
As seen on the 24/7 Wall St. homepage on July 28, 2026.
Tokyo's biggest one-day drop this month as Bank of Japan tightening fears unwind the yen carry trade that had fueled gains.
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The Nikkei 225 closed at 62,427.5 on the Japan Exchange, shedding 2,503 points from its previous close of 64,931.19. Losses were steep from the opening bell and deepened through the afternoon session, with the index spending much of the day down more than 4% before a modest late recovery trimmed the final reading to 3.86%.
The selling pressure was tied to fears that the Bank of Japan may tighten monetary policy, a prospect that tends to unwind the yen carry trade. That trade, in which investors borrow cheaply in yen to fund positions in higher-yielding assets, had been a meaningful driver of prior gains for Japanese equities. When expectations shift toward a stronger yen, those positions get unwound quickly, amplifying downside moves.
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The scale of the decline makes it the largest single-day drop for the Nikkei 225 this month. Investors will be watching closely for any guidance from the Bank of Japan on the pace and timing of any policy adjustments, as further signals in either direction are likely to drive the next significant move in Tokyo equities.