Japan's Nikkei falls from record as inflation, interest rate concerns mount

TOKYO: Japan’s Nikkei share average hit a record high on Thursday before falling into negative territory as concerns about inflation and rising interest rates overwhelmed enthusiasm over technology stocks.

The benchmark Nikkei 225 Index fell 1% to close at 62,654.05 after touching an unprecedented 63,799.32 earlier in the session.

The broader Topix slid 1.03% to 3,879.27.

Tech shares helped Wall Street indexes notch record closing levels overnight, and gains by Japanese companies linked to the artificial intelligence boom were enough to give the Nikkei an early advance.

Yields on long-term Japanese government bonds jumped to record highs on Thursday as inflationary pressures from the Middle East crisis mounted. Bank of Japan board member Kazuyuki Masu called for an early hike of interest rates to rein in prices.

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Nonferrous metal producers and real estate companies were the worst performers among the Tokyo Stock Exchange’s 33 industry sub-indexes. Mitsui Fudosan, a major real estate developer, plunged 10%.

“In a situation where concerns about stagflation are growing, a rise in interest rates generally acts as a negative factor for real estate stocks, and today we can see that this factor is becoming apparent,” said Wataru Akiyama, an equities strategist at Nomura Securities.

“Looking at the performance of individual stocks today, there are still quite a few being sold off due to negative earnings, so investor caution is warranted.”

There were 92 advancers on the Nikkei index against 133 decliners. The largest losers were Fujikura, down 19.1%, followed by Mitsubishi Materials, which slid 12.1%.

The largest percentage gainers in the index were Tokai Carbon, up 18.5%, followed by Nissui Corp, which jumped 11%.

SoftBank Group, an AI investor that has been a big contributor to gains in the Nikkei this year, said on Wednesday that its net profit more than tripled in the January-March quarter. Even so, the company’s shares sank 4%.