Japan’s Nikkei Closes at Two-Week Low after Heavy Sell-off of US Stocks, Bonds (UPDATE 2)

Reuters

10:06 JST, May 22, 2025 (updated at 17:00 JST)

TOKYO, May 22 (Reuters) – Japan’s Nikkei share average closed at a two-week low on Thursday, as investors turned risk-off after sharp declines on Wall Street and a spike in U.S. Treasury yields stoked worries about a flight from U.S. assets.

The Nikkei fell 0.84% at 36,985.87, its lowest close since May 8.

The broader Topix slipped 0.58% to 2,717.09.

“Caution emerged that there may be another sell-off of U.S. assets. U.S. Treasury yields rose, but the U.S. dollar weakened,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

“The sell-off of U.S. assets overnight reminded the market of the rout in April after (U.S. President Donald) Trump’s tariff announcements,” he said.

Overnight, U.S. stocks closed sharply lower as Treasury yields spiked on worries that U.S. government debt would swell by trillions of dollars if Congress passes Trump’s proposed tax-cut bill.

Longer-dated U.S. Treasury yields rose overnight after the Treasury Department’s $16 billion sale of 20-year bonds saw soft investor demand.

The yen strengthened against the dollar and was last up 0.23 % at 143.36.

Investor sentiment eased due to limited yen gain after the top financial officials of the U.S. and Japan agreed that the dollar-yen exchange rate currently reflects fundamentals, said Shinkin’s Fujiwara.

A stronger yen typically weighs on exporter shares by reducing the value of overseas earnings when converted back into Japanese currency.

Among individual stocks, chip-related Tokyo Electron and Advantest fell 2.43% and 3.22%, respectively, dragging the Nikkei the most.

Railway operator Keisei Electric Railway shed 10.87% to become the biggest percentage loser on the Nikkei.

Cable maker Furukawa Electric, a gauge for AI-related investment, jumped 11.33% to become the top performer.