TOKYO (Kyodo) — The Nikkei index fell Monday for the third straight day, as a rise in long-term government bond yields to a nearly 10-year high spurred selling of tech issues, while investors adopted a wait-and-see stance ahead of U.S. inflation data due out later this week.
The 225-issue Nikkei Stock Average ended down 139.08 points, or 0.43 percent, from Friday at 32,467.76. The broader Topix index finished 1.46 points, or 0.06 percent, higher at 2,360.48.
Decliners were led by real estate, marine transportation and machinery issues.
The U.S. dollar dropped to the lower 146 yen range in Tokyo after revisiting a 10-month high of 147.87 yen in New York on Friday, as yen buying was spurred by speculation that the Bank of Japan would shift to monetary tightening following recent remarks by Governor Kazuo Ueda.
At 5 p.m., the U.S. dollar fetched 146.19-20 yen compared with 147.78-88 yen in New York and 147.38-41 yen in Tokyo at 5 p.m. Friday.
The euro was quoted at $1.0725-0727 and 156.79-83 yen against $1.0695-0705 and 158.12-22 yen in New York, and $1.0707-0709 and 157.82-86 yen in Tokyo late Friday afternoon.
The yield on the benchmark 10-year government bond rose 0.060 percentage point from Friday’s close to 0.705 percent, a level unseen since January 2014, after Ueda hinted at the possibility of ending the central bank’s negative interest rate policy in a newspaper interview published Saturday.
Tokyo stocks opened higher as investors scooped up battered shares following declines Friday, but the Nikkei quickly lost steam to end lower as wariness over future monetary policies in Japan and the United States weighed on the market.
While Nikkei heavyweight semiconductor issues faced selling on the back of rising Japanese bond yields, the overall market was supported by gains in bank shares as higher interest rates raise the prospect of improved profits.
Ueda said in the interview that ending the negative interest rate policy is an option if the central bank is assured of sustained increases in inflation accompanied by wage growth.
Investors were also awaiting U.S. inflation data due out Wednesday, to be followed by the Federal Reserve’s policy meeting next week, for clues on the future direction of interest rates in the United States, analysts said.
“Investors are in waiting mode this week with the upcoming U.S. consumer price index and producer price index data, so they appeared to be taking a cautious stance,” said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.
“The performance of U.S. stocks was lackluster last week, and their lack of gains has also led to some uncertainty in the Japanese market,” Yamaguchi added.
Semiconductor heavyweights pulled down the benchmark index throughout the day, with Tokyo Electron, a maker of chip manufacturing equipment, dropping 630 yen, or 3.0 percent, to 20,490 yen, and chip-testing equipment maker Advantest sliding 605 yen, or 3.5 percent, to 16,910 yen.
Real estate issues also suffered losses as a rise in interest rates would lift mortgage rates and dent housing demand. Mitsui Fudosan shed 147 yen, or 4.3 percent, to 3,295 yen, while Sumitomo Realty & Development fell 144 yen, or 3.5 percent, to 3,965 yen.
Among financial issues that drew buying, Sumitomo Mitsui Financial Group surged 370 yen, or 5.3 percent, to 7,295 yen, while Mitsubishi UFJ Financial Group jumped 52 yen, or 4.3 percent, to 1,264 yen.
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