TOKYO: Japan’s Nikkei share average tumbled on Thursday, tracking a sell-off on Wall Street after robust US economic data fuelled bets for a more hawkish Federal Reserve, while mounting tensions in the Middle East also heightened risk aversion.
Chip-related shares were notable underperformers after traders took cues from US peers as a spike in long-term Treasury yields to 16-year peaks weighed on the so-called growth stocks.
The Nikkei was down 1.86% at 31,446.99 as of the midday break, the lowest level since Oct. 10. Of its 225 components, 194 fell versus 30 gainers, with one flat.
Heavyweight chip-making equipment maker Tokyo Electron dropped 4.7% to be the biggest drag on the Nikkei. Chip-testing equipment maker Advantest slumped 3.4%.
Lasertec and Screen Holdings fell 2.8% and 4.5%, respectively. The broader Topix lost 1.45%.
Overnight, US data showing single-family homebuilding rebounded in September fuelled the prospects of higher-for-longer rates.
The 10-year US Treasury yield pushed as high as 4.955% on Thursday.
Japan’s Nikkei falls as strong US data stokes fear of Fed turning more hawkish
On the geopolitical front, US President Joe Biden flew out of Israel following a less than eight-hour visit, while protests flared around the Middle East in the aftermath of a deadly explosion at a Gaza hospital.
“The level of uncertainty is high, making it difficult to buy dips” in stock prices, said Mitsunari Akino, a director at Ichiyoshi Asset Management.
A 5% US long-term yield “has come into sight,” unnerving investors, he said.
“Fundamentals are not bad, but it’s a ripe environment for a spike in volatility.”
A gauge of Nikkei volatility climbed back toward the nearly four-month high reached at the start of this month.
Automakers were among other stand-out losers, with Mitsubishi Motors diving 4.8%, Nissan slumping 3.2% and Toyota slipping 1.2%.
Among notable winners, cosmetics maker Kao and Canon each added 1.1% to be the Nikkei’s top performers. Shares of Nintendo rose 0.7%.
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