Tokyo stocks tumble in morning on high bond yields, US-Iran conflict

Tokyo's stock market experienced a significant decline on Wednesday morning, as elevated Japanese government bond yields and inflation concerns took hold following renewed clashes between the United States and Iran. The Nikkei Stock Average, which tracks the performance of 225 major companies, dropped 1,742.18 points or 2.63 percent, closing at 64,473.16.

The broader Topix index, representing the performance of 1,000 large-cap Japanese stocks, fell 91.58 points or 2.19 percent, settling at 4,090.28. The U.S. dollar strengthened against the yen, driven by increased selling of the currency triggered by rising crude oil prices, a key concern for Japan, which heavily imports oil. At noon, the dollar traded in a range of 160.27-28 yen, slightly higher than its previous value of 160.16-26 yen.

The euro was also quoted at $1.1581-1581 and 185.61-62 yen, compared to $1.1588-1598 and 185.64-74 yen in New York. The yield on the benchmark 10-year Japanese government bond surged to 3.015 percent, its highest level since September 1996, reflecting investor concerns over potential rate hikes by the Bank of Japan. The Bank of Japan had been under pressure from U.S. Treasury Secretary Scott Bessent to raise interest rates, with dealers speculating that such a move might be imminent.

The Middle East tensions, accompanied by a surge in crude oil prices, further weighed on the market, particularly affecting shares related to artificial intelligence and semiconductors.