Global Market: Japan stocks slide as oil spike and rising bond yields weigh on sentiment

Japan’s Nikkei share average fell on Tuesday, putting the benchmark on course to end a five-session winning streak, as the stalemate in the Middle East conflict pushed oil prices higher and revived concerns over inflation and risks in global bond markets, as per a report by Reuters.

The Nikkei was down 1.1% at 68,460.56 by late morning, after gaining 5.5% over the previous five trading sessions. The broader Topix index slipped 0.2% to 4,177.50.

The decline came as uncertainty over the Middle East conflict weighed on investor sentiment. A truce between the United States and Iran expired this week, with Washington ruling out an extension, while Tehran said it would move to a fully offensive military posture.


According to Reuters, crude oil prices rose as shipping traffic through the strategically important Strait of Hormuz again came to a halt. The rise in oil prices heightened concerns that prolonged disruptions to energy supplies could fuel inflation globally.

Bond yields also moved higher amid renewed inflation worries, including in Japan, adding pressure to equity valuations. Reuters cited Nomura Securities equities strategist Wataru Akiyama as saying that rising interest rates could make relatively expensive share prices less attractive, while persistent inflation concerns in Japan and the United States could weigh on stock markets.

The impact was uneven across sectors. Shipping stocks rallied on expectations that disruptions to global trade could push freight rates higher. The marine transport sector was the best performer among the Tokyo Stock Exchange’s 33 industry groups, gaining 4.1%.

Technology stocks were mixed. SoftBank Group, which invests in artificial intelligence startups, rose 2.7%, while Tokyo Electron, a maker of chip-testing equipment, fell 4.3%.

The retreat in Japanese equities came after a strong run that had pushed the Nikkei higher for five consecutive sessions, with investors now weighing the impact of higher energy costs, rising bond yields and geopolitical uncertainty on corporate earnings and valuations.