Japan's Nikkei slumps as oil, bond yields weigh on sentiment

TOKYO: Japan’s Nikkei share gauge fell sharply on Tuesday as a global surge in bond yields and rising oil prices weighed on sentiment.

The benchmark Nikkei 225 slid 1.23% to 65,070.58 in early trading, set for a second straight decline.

The broader Topix slipped 1.75% to 4,040.16.

The selloff followed overnight declines in US equity markets, as rising oil prices and Treasury yields stoked inflation worries and concerns that monetary policy would stay tight.

Pressure is also building in Japan, with the nation’s government bond yields hovering near multi-decade highs.

US and Iranian officials spoke separately with mediators on Monday as part of a renewed effort to end seven months of war that has roiled energy markets.

“It seems fair to say that these concerns about inflation, and the resulting rise in interest rates, are weighing on the stock market,” said Wataru Akiyama, an equities strategist at Nomura Securities.

“Regarding AI-related shares, which have been a driving force in the Japanese stock market, there is a growing perception that they are relatively overvalued in the context of rising interest rates.”

On the Nikkei, 26 advancers faced 199 decliners.

The largest losers by percentage were NEXON, down 14.57%, followed by Idemitsu Kosan, down 5.1%, and Chubu Electric, which sank 4.46%.

The largest gainers were Tokai Carbon, up 3.29%, followed by Screen Holdings, up 2.65%, and Lasertec , up 2.48%.