Global Market: Japan's Nikkei falls as higher yields, inflation fears weigh

TOKYO: Japan's Nikkei share average fell on Tuesday, dragged lower by technology stocks as investors weighed rising bond yields and persistent inflation concerns that clouded the outlook for growth shares.

The Nikkei fell 0.86% to 64,360.16 by 0204 GMT, while the broader Topix slipped 0.95% to 4,028.97.

"Bond yields are on the rise as markets expect central bank tightening to fend off inflation," said Koji Toda, senior fund manager at Resona Asset Management.


"This anxiety weighs on investor sentiment. US technology stocks rose overnight, but they are cautious about whether this momentum will continue."

The tech-heavy Nasdaq Composite gained 1% overnight as investors returned to the chip sector and other AI-related stocks after last week's bruising selloff, while awaiting key corporate earnings reports.

Nasdaq futures recouped early losses to trade flat in Asian trading.

US Treasury yields rose overnight, with the benchmark 10-year yield coming off its biggest weekly drop in seven months, as concerns about the impact of higher interest rates on AI-related stocks eased.

In Japan, AI investor SoftBank Group fell 6%, making it the biggest drag on the Nikkei and the index's worst performer by percentage.

Fibre optic cable maker Fujikura fell 5.49% and peer Furukawa Electric lost 4.88%.

Chip-testing equipment maker Advantest reversed early losses to edge up 0.32%.

Uniqlo-brand owner Fast Retailing rose 0.65% to provide the biggest support for the Nikkei.

Banks fell, with Mizuho Financial Group slipping 2.87%, while Mitsubishi UFJ Financial Group lost 1.61%.

The Topix value index lost 1.17%, while the growth index was down 0.62%.

Of more than 1,500 stocks trading on the Tokyo Stock Exchange's prime market, 76% fell, 20% rose and 2% traded flat.