Japanese equities fell for a second straight session, with AI-linked names and chip-related stocks under pressure as rising bond yields unsettled investors. Early in the session, the Nikkei 225 dropped more than 3%, while shares including memory chip maker Kioxia Holdings and fiber-optic cable producer Furukawa Electric were among the weaker performers. The broader Topix also fell as much as 2.8%, dragged down by electronics and banking stocks.
The move came as investors weighed the effect of higher borrowing costs on companies tied to the AI spending cycle. A chief strategist at Daiwa Asset Management said rising yields could increase funding costs for hyperscale cloud providers, raising questions about capital expenditure plans and potentially hitting infrastructure companies that have benefited from the AI investment boom. In Japan, the 10-year government bond yield climbed to its highest level since 1996 on Tuesday, while the market speculated that the Bank of Japan could raise rates next month. The 10-year U.S. Treasury yield was also hovering near its highest level since early 2025.
Japanese stocks fell for a second straight day as a surge in bond yields damped investor appetite for AI-related trades and weighed on chip-linked shares.
According to Odaily, citing Jin10, the Nikkei 225 was down more than 3% early in the session. Among the notable decliners were memory chip maker Kioxia Holdings and fiber-optic cable manufacturer Furukawa Electric.
The broader Topix also fell as much as 2.8%, with electronics and banking stocks dragging on the index.
Higher yields raise questions over AI spending
A chief strategist at Daiwa Asset Management said: "Higher yields will raise borrowing costs for hyperscale cloud service providers, prompting questions about the outlook for capital spending and potentially affecting infrastructure companies that have benefited from the AI investment boom."
On Tuesday, Japan's 10-year government bond yield rose to its highest level since 1996, while the market speculated that the Bank of Japan could raise interest rates next month. At the same time, the 10-year U.S. Treasury yield was near its highest level since early 2025.
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