Markets turned sharply downward in afternoon trading, with both A-shares and select commodities experiencing a rapid sell-off.

China's three major stock indices reversed early gains during the afternoon session. At the close, the Shanghai Composite Index fell 0.5%, the Shenzhen Component Index dropped 0.87%, and the ChiNext Index lost 0.45%. Combined turnover on the Shanghai and Shenzhen exchanges reached 2.55 trillion yuan, expanding by 398.5 billion yuan from the previous session, while more than 4,300 stocks ended the day in negative territory.

Sector performance was mixed. The pharmaceutical sector showed strength, the computing power leasing theme extended its recent rally, the food and beverage segment turned active again, the sub-node concept fluctuated higher, and the power sector saw renewed buying interest in the afternoon. On the downside, precious metals names corrected, with Xiaocheng Technology, Zhaojin Gold, and Hunan Silver all declining.

In the commodities space, gold and silver also reversed course from gains to losses.

On the news front, according to a Bloomberg report, market sources indicate that Japanese Prime Minister Shigeru Ishiba supports the Bank of Japan raising interest rates in the near term, with the next move potentially coming in September or October. The Japanese government is said to be seeking to enhance the effectiveness of the recent joint U.S.-Japan intervention in the currency market. If the report is accurate, a rate hike by the Bank of Japan next month appears to be a highly probable event.

Analysts note that the short-term liquidity shock from a Japanese rate hike is a real risk. The yen serves as a core global funding currency, and a rate hike could trigger a large-scale unwinding of carry trades. This would likely cause leveraged capital to exit risk assets en masse, including industrial metals such as copper and aluminum, leading to temporary price corrections. A similar pattern occurred in 2024, when a rapid yen appreciation coincided with simultaneous pressure on the Nasdaq and commodity prices. However, from a dollar-centric perspective, a stronger yen could weaken the dollar, which would actually be supportive of non-ferrous metals.

In the broader Asian context, Japan's Nikkei 225 closed 1.16% higher at 68,308.59 points, while South Korea's KOSPI Index surged 3.56% to 6,813.34 points. The KOSPI has staged a robust recovery from the historic sell-off in late July, rallying more than 22% in roughly ten trading sessions and officially crossing into technical bull market territory. Analysts point out that the iShares MSCI South Korea ETF has broken through key technical resistance, confirming a reversal pattern.