The leveraged ETF tracking the Nikkei 225 index, CSOP Nikkei 225 Daily (2x) Leveraged Product (07262), tumbled over 4% in trading. At the time of writing, it was down 4.06% to HK$194, with a turnover of HK$3.9973 million.
This sharp decline followed a significant drop in the underlying index. On the morning of June 4th, the Nikkei 225 index fell more than 2% at one point, hitting an intraday low of 66,920.8 points. The market sentiment was heavily influenced by currency movements and hawkish commentary from the Bank of Japan.
The Japanese yen weakened considerably, with the USD/JPY pair briefly touching 160 on Wednesday. This currency pressure coincided with a key speech from Bank of Japan Governor Kazuo Ueda. In his final scheduled public remarks before the policy meeting on June 15-16, Ueda indicated that if the central bank judges the risks of rising prices to outweigh the risks of an economic slowdown, it would be necessary to "fully discuss the pros and cons of raising the policy interest rate."
This statement was interpreted as a strong signal for potential monetary tightening, significantly boosting market expectations for action from the central bank this month. By Wednesday afternoon, traders were pricing in an approximately 85% probability of a 25-basis-point rate hike by the Bank of Japan in June. If implemented, this move would lift Japan's benchmark interest rate to its highest level since 1995.
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