Hey everyone, Hirokichi here. Today’s big story was the coordinated Japan-US currency intervention, and it sent the market swinging hard. The Nikkei 225 dropped more than 1,600 yen at one point, but by the close it had trimmed that loss to 607 yen, ending at 63,754 yen. The dollar briefly slid to the 155 yen level against the yen. Tonight, the US ISM Manufacturing PMI and a batch of earnings should be the key drivers.
Nikkei Swings From a 1,600+ Yen Plunge to Close 607 Yen Lower at 63,754
Tokyo stocks had a wild session on the 3rd after the Japanese and US governments intervened in the currency market. Against the previous Friday’s close of 64,362.02 yen, the Nikkei 225 opened 527.07 yen lower at 63,834.95 yen. By 9:51 a.m. it had fallen as much as 1,534.20 yen to 62,827.82 yen, and at the midday close it was down 1,121.51 yen (-1.74%) at 63,240.51 yen, a sharp decline.
In the afternoon, though, the losses steadily narrowed, and the Nikkei finished the day down 607.12 yen (-0.94%) from the previous Friday at 63,754.90 yen, its first decline in three sessions (Source: Nikkei newspaper). TOPIX (the Tokyo Stock Price Index) was also down 86.69 points at 3,916.61 as of the midday close, with 32 of 33 sectors on the Prime Market in the red.
Given how deep the morning drop was, I was struck by how much buying came back in the afternoon. That probably shows the market’s worry about the intervention eased a bit as the day went on.
Currency: Coordinated Japan-US Intervention Sends the Dollar Briefly Below 156 Yen
The main driver of today’s stock decline was “coordinated intervention” in the currency market. It emerged on August 2 that the Japanese and US governments had carried out a coordinated yen-buying, dollar-selling intervention on July 31 (US Eastern time). This was the first coordinated intervention since right after the 2011 Great East Japan Earthquake, and the first for yen-buying purposes in 28 years. On the 3rd, Japan’s Finance Minister Satsuki Katayama issued a formal statement.
As a result, the dollar/yen rate jumped from 160.20-160.22 yen at the end of last week to briefly around 155 yen (yen strength), before settling into a range of roughly 156 to 157 yen for the rest of the day (Source: Zaikei Shimbun, Gaitame.com). This looks like a response to the yen sliding to around 164 per dollar in late July, its weakest level in about 40 years. I covered the background in more depth in [Explainer] Japan-US Joint Intervention, First in 15 Years: How It Differs from the Exact Opposite Move in 2011, so please take a look if you’d like more context.
A stronger yen is a headwind for exporters’ earnings, so selling spread across export-related names such as automakers and insurers. How long the effect of the intervention lasts will be the thing to watch this week.
Sectors and Stocks in Focus
- Biggest negative contributors: Fanuc (dropped sharply on disappointing earnings), Advantest, Kyocera
- Biggest positive contributors: Kioxia Holdings, SoftBank Group, TDK
- Export-linked names such as Toyota Motor and Honda, along with insurers like Tokio Marine and MS&AD, also saw selling (Source: Kabutan News, Wealth Advisor)
Watching how much a single earnings report moved Fanuc’s stock reminded me, once again, how much individual company results can drive the market.
Tonight’s US Outlook: ISM Manufacturing PMI and Hawkish Fed Comments in Focus
On Wall Street last Friday (July 31), all three major indexes closed higher: the Dow Jones Industrial Average rose 0.53% to 52,485.03, the S&P 500 gained 0.70% to 7,489.72, and the Nasdaq Composite climbed 1.00%. Amazon.com jumped 14.01% on strong earnings, while Apple slid 9.42% on a weak outlook, so tech names were split between winners and losers.
Tonight (August 3), the July ISM Manufacturing PMI (Institute for Supply Management, the index that tracks US factory sentiment) and June construction spending are due. Consensus expects the ISM Manufacturing figure to come in around 54.0, up from 53.3 previously, above the key 50 level. On the earnings front, ON Semiconductor and Tyson Foods report before the opening bell, while Vertex Pharmaceuticals and Clorox report after the close (Source: company earnings calendars).
Another thing to watch is comments from Federal Reserve officials. Minneapolis Fed President Kashkari, Cleveland Fed President Hammack, and Dallas Fed President Logan have all pointed to tariff policy and massive AI-related data center investment as reasons inflation could stay elevated, and have argued for tighter monetary policy, including further rate hikes. This week also brings the ISM Services PMI on August 5 and the jobs report on August 7, so expectations around monetary policy should keep driving the market.
How the ripple effects of this currency intervention reach the US market is something I’ll be watching closely too.
Wrap-up
The currency intervention was today’s big story, and it sent the Nikkei on a wild ride, but by the close the loss had narrowed to around 600 yen. A stronger yen is a headwind for exporters, but correcting an overly weak yen isn’t a bad thing in the long run, in my view. I’ll be watching tonight’s ISM Manufacturing PMI, US corporate earnings, and Fed comments as we head into next week.
Here is my previous market recap → [Market Recap] Nikkei Rebounds 433 Yen to 61,867 for the First Time in Three Days, but TOPIX Falls – Tonight’s Focus: US GDP, PCE, and Apple and Amazon Earnings [2026/7/30]
日本語版はこちら → 日経平均607円安の63,754円で3日ぶり反落！日米協調介入で円急伸、今夜はISM製造業に注目【2026/8/3】
* This article is for informational purposes only and is not investment advice. Please invest at your own responsibility.
コメント