TOKYO: Tokyo stocks tumbled for the second straight day on Thursday in the wake of Fitch’s downgrade of its US credit rating and after Japanese bond yields rose.
The benchmark Nikkei 225 index fell 1.68 percent, or 548.41 points, to 32,159.28 while the broader Topix index fell 1.45 percent, or 33.41 points, to end at 2,268.35.
Sony Group dropped 2.27 percent to 12,935 yen while Toyota dropped 3.80 percent to 2,407.5 yen on profit-taking, after two days of strong gains following its announcement of better-than-expected financial results.
The Japanese market “succeeded negative sentiments in the US market following (the) rise in yields” of US government bonds due to Fitch’s downgrade of the US Treasury securities, Iwai Cosmo Securities said in a note.
“Rise in yields of Japanese (government) bonds also weighed on the market,” it added.
Higher yields generally mean investors move into bonds – fixed-income assets – over other assets including stocks.
Overnight in New York, US stocks joined a sea of red on global equity bourses after Fitch stripped the United States of its highest credit rating.
The Dow shed almost 350 points, or 1.0 percent, to finish at 35,282.52, the broad-based S&P 500 dropped 1.4 percent, and the tech-rich Nasdaq Composite Index tumbled 2.2 percent.
Japanese shares fall amid caution after US rating cut, chip stocks weigh
On Thursday, Japan’s 10-year government bond yields temporarily rose to 0.655 percent, the highest level since January 2014, Jiji Press reported.
The Bank of Japan later announced an unscheduled operation to buy 400 billion yen ($2.8 billion) to curb the rise in yields, which sent the yen cheaper.
The dollar fetched 143.83 yen in late Asian trade, up from 143.32 in Tokyo morning hours and from 143.37 yen in New York late Wednesday.
SoftBank Group slipped 0.77 percent to 6,929 yen.
Semiconductor-linked shares were also among the losers, with chip-testing equipment maker Advantest losing 2.65 percent to 18,885 yen, and chip-making equipment manufacturer Tokyo Electron declining 1.11 percent to 20,910 yen.