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Nikkei drops nearly 3% as US yield rise


The Nikkei Stock Average fell 2.8%, while the broader Topix index shed 1%

Japan’s equity benchmark dropped nearly 3% on Thursday as investors continued to fret over rising U.S. Treasury yields, while other Asian stock markets also retreated.

The Nikkei Stock Average fell more than 800 points, or 2.8%, to drop below the 29,000 mark, while the broader Topix index shed 1%. The information and technology, retail and service industries took the brunt of the reaction.

Japan’s startup-heavy Mothers index of emerging companies fell more than 2% as investors rushed to dump high valuation growth stocks, which are sensitive to rising yields as it reduces their intrinsic value.

Shares in SoftBank Group dropped more than 5% while Sony fell close to 3%. Stocks with high price-to-earnings ratios, such as digital advertising company CyberAgent and online medical platform M3, also fell, while SoftBank Group affiliate Z Holdings dipped more than 4%.

The sell-off in Tokyo followed a decline in U.S. stocks, especially the Nasdaq, which dipped 2.7% on Wednesday as the yield on the benchmark 10-year bond jumped to near 1.5%.

Fears over the rapid rise of U.S. Treasury yields rippled across Asian stocks markets on Thursday.

Mainland China’s stock index, the Shanghai Composite, shed 1.6%, while Hong Kong’s Hang Seng index dipped 2% as Alibaba Group Holdings’ stock price fell over 2% and Tencent Holdings dropped over 3%.

In South Korea, the Kospi index was down 1.4%, dragged by a decline in Samsung Electronics shares, which fell 1.8%, as well as SK Hynix, whose stock price fell more than 3%.

Benchmarks in Taiwan, Australia and Indonesia also tumbled.

Japan’s stock market also dipped on Prime Minister Yoshihide Suga’s comments Wednesday that it will be necessary to extend the COVID-19 state of emergency by two more weeks for the greater Tokyo metropolitan area. Shares in travel-related companies, restaurants and retailers dropped sharply on Thursday.

Uniqlo operator Fast Retailing’s shares lost 4%, while department store operators also saw their stock prices drop. Shares in airlines, including ANA Holdings and Japan Airlines, fell nearly 2%.

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