The impact of Japan's interest rate hike on the global financial market is mainly reflected in the appreciation of the yen, capital repatriation, rising bond yields, and pressure on risk assets. Specifically, it manifests as:

Yen rise and capital flow
The Bank of Japan's rising interest rate expectations are driving the yen higher against the US dollar, with the yen already rising to around 155.5 ahead of the December 19 meeting. Under the long-term ultra-low interest rate policy, Japan has become the core of global arbitrage trading, and interest rate hikes will encourage capital to flow back to Japan, reducing allocations to high-yield overseas bonds (such as US Treasuries).

Bond market volatility
The yield on Japan's 2-year government bonds rose to 1% (a 17-year high), while the 10-year yield reached its highest point since 2008, driving U.S. Treasury yields up to 4.04%. The interconnectedness of the global bond market has strengthened, with government bond yields in Europe, New Zealand, and other countries rising in tandem.

Risk assets under pressure
Interest rate hike expectations have triggered risk aversion in the market, with the three major U.S. stock indices (Nasdaq, S&P 500, Dow Jones) all falling more than 0.5% in a single day, and Bitcoin briefly dropping below $85,000. Gold reached a six-week high at $4,264.61/ounce.

Global economic chain reaction
Japan is one of the largest countries for cross-border bond investment globally, and interest rate hikes may trigger a wave of arbitrage trading closures, impacting markets such as Hong Kong stocks and Chinese concept stocks. Historical data shows that Japan's interest rate hike cycles are often accompanied by declines in the stock market (for example, the Nikkei 225 index fell by 20% in 2000 and 40% in 2006-2007).

Impact on Enterprises and Residents
Interest rate hikes raise corporate financing costs, intensifying financial pressure on small and medium-sized enterprises; while residents' deposit interest increases, the rise in import costs may exacerbate inflationary pressures.