Tokyo Stocks Plunge Over 3% Amid Rising Bond Yields and Middle East Tensions

Tokyo stocks plummeted on Wednesday, with the Nikkei index briefly dropping over 3% due to rising Japanese government bond yields and growing inflation concerns.

The 225-issue Nikkei Stock Average ended down 1,889.70 points, or 2.85%, from Tuesday at 64,325.64, while the broader Topix index finished 100.26 points, or 2.40%, lower at 4,081.60.

The increase in bond yields was largely driven by expectations of an early interest rate hike by the Bank of Japan, with hawkish policymaker Hajime Takata stressing the need for a rate hike.

The rising bond yields and heightened tensions in the Middle East, which pushed oil prices up to above $90 per barrel, weighed heavily on investor sentiment, particularly in artificial intelligence- and semiconductor-related shares.