TOKYO: Tokyo’s blue chip shares drifted lower Monday, driven down by the yen’s appreciation and the rise of Japan’s bond yields.
The benchmark Nikkei 225 index fell 0.43 percent, or 139.08 points, to 32,467.76, while the broader Topix index edged up 0.06 percent, or 1.46 points, to 2,360.48.
The market began in the green, rebounding from last week’s falls while investors cheered gains in New York.
But the yield on the benchmark 10-year Japanese government bond climbed to 0.7 percent, the highest level since 2014, hitting major semiconductor shares.
The yields surged after Bank of Japan governor Kazuo Ueda told the Yomiuri Shimbun in a recent interview that the central bank could have enough data this year to decide whether to end negative interest rates.
The comment fuelled speculations that Japan could tighten its monetary policy and narrow the gap in bond yields between Japan and the US.
It pressed investors to purchase the yen against the dollar, which slipped to 146.22 yen in Asian trade, compared with 147.81 yen in New York on Friday.
“The rise of the domestic bond yields encouraged sales of large semiconductor shares, which then dragged down the entire market,” IwaiCosmo Securities said in a note.
Following the Ueda interview, “the yen’s strength seemed to have served as a headwind for the market,” the brokerage said.
Among major shares, Tokyo Electron, which makes tools to build semiconductors, fell 2.98 percent to 20,490 yen. Advantest, which makes tests for semiconductors, lost 3.45 percent to 16,910.
Chipmaker and Apple supplier Murata Manufacturing edged down 0.02 percent to 8,147 yen.
Another parts maker Kyocera dropped 0.72 percent to 7,396 yen.
Banking issues jumped on speculations that the rising yields may help their earnings. Mitsubishi UFJ Financial Group jumped 4.29 percent to 1,264 yen. Mizuho Financial Group rose 4.43 percent to 2,581.5 yen.
Toyota fell 0.31 percent to 2,595 yen. Sony Group added 0.73 percent to 12,465 yen.
Heavily weighted Fast Retailing, which operates the Uniqlo brand, lost 0.47 percent to 33,560 yen.