When Japan announces a rate hike, it usually doesn't stop the decline; instead, it may even accelerate downward. However, there is a high likelihood of a rebound afterward.

Looking at the two previous rate hikes, the market often anticipates the rate hike in advance, leading to a gradual decline; when the news actually materializes, short-term sharp drops are common, sometimes within just a few days, followed by a quick rebound.

The reason is that after a rate hike, Japanese funds tend to flow back to the domestic market, tightening overseas liquidity, which can cause the market to suddenly lose support. However, after a sharp decline, there are often stage-wise low-price opportunities, which could be a good entry point for bottom fishing.