The Nikkei 225 Index Closes 4.73% Lower

Asian equity markets declined on Tuesday as oil prices climbed higher amid renewed hostilities in the Middle East, stoking inflation concerns and strengthening expectations for near-term interest rate hikes. US forces struck an island in the Strait of Hormuz, while Iran responded with attacks on the UAE and Jordan, marking a return to combat between the US and Iran after roughly a month. Global bond yields rose to fresh highs on growing inflation concerns, with Japan’s benchmark 10-year yield reaching a fresh 30-year high, adding to downward pressure on equities. Stocks in Australia, Japan, South Korea, China and Hong Kong all fell, with technology and artificial intelligence-related companies leading the losses.

The Nikkei 225 Index fell 0.6% to below 66,000 on Tuesday, extending losses from the previous session as rising oil prices stoked inflation concerns and strengthened expectations for near-term interest rate hikes. Japanese shares also followed a weak lead from Wall Street overnight, where Treasury yields climbed on growing bets that the Federal Reserve will raise interest rates this month. Domestically, investors are also betting that the Bank of Japan could hike rates in September amid concerns over persistent yen weakness and import-driven inflation. Technology and AI-related stocks led the decline, with notable losses from Fujikura (-3%), Advantest (-2.9%), Tokyo Electron (-4.6%), Taiyo Yuden (-1.5%) and Murata Manufacturing (-1.4%). Financial stocks dropped as well, while consumer stocks posted small gains.

The Nikkei 225 Index decreased 277 points or 0.42 percent on Monday to close at 66129 points. The decline was led by Toho Zinc (-7.28%), Mitsubishi Materials (-6.92%) and Japan Steel Works (-5.41%). On the upside, the strongest performers were Tokai Carbon (7.97%), Kansai Electric Power (7.31%) and Casio Computer (5.28%).