The decision by Japan's central bank to raise interest rates directly impacts the valuation of Japanese stocks, potentially leading to increased volatility in the EWJ ETF. This is because higher interest rates can lead to higher borrowing costs for companies, affecting their profitability and stock prices.

The pullback in chip stocks is a direct result of market anticipation of the Federal Reserve's decision. As SMH tracks the semiconductor sector, a downturn in chip stocks directly affects its performance. Investors may be cautious, leading to a potential short-term negative impact on SMH's price.