Nikkei slips as rising bond yields and inflation worries weigh on stocks

what happened

Japan's Nikkei index dropped 0.86% on Tuesday to 64,360.16 points by 0204 GMT, while the broader Topix declined 0.95% to 4,028.97. Technology names led the decline: SoftBank Group sank 6%, fibre optic maker Fujikura lost 5.49% and Furukawa Electric shed 4.88%. Reuters reported that traders are weighing higher government bond yields and stubborn inflation, which cast doubt on the outlook for growth stocks.

Koji Toda, senior fund manager at Resona Asset Management, said: "Yields are climbing because the market expects central banks to tighten policy to contain inflation. That worry is hurting investor sentiment." Banks also fell, with Mizuho Financial Group down 2.87% and Mitsubishi UFJ Financial Group off 1.61%. Of more than 1,500 stocks on the Tokyo Stock Exchange's prime market, 76% declined and 20% advanced.

why it matters

Overnight gains in the US, where the Nasdaq Composite rose 1% on chip and AI-related shares, did not carry over to Tokyo. The 10-year US Treasury yield also retreated from its biggest weekly drop in seven months. For Japanese equities, the key question is whether that rebound holds and how interest rate expectations evolve from here.

market impact

Japanese equities: pressure on tech shares from rising bond yields and inflation expectations

tags

instruments