Japanese shares closed lower on Tuesday after a three-session rally, tracking a weaker finish on Wall Street and as big tech stocks sold off amid fears over higher U.S. interest rates.
The Nikkei share average fell 0.94% to close at 28,230.61, while the broader Topix fell 0.7% to 1,982.68.
“Wall Street’s lower finish has pushed Japanese shares down but I would say today’s declines were rather a reaction to a strong rally in the past few sessions,” said Hideyuki Suzuki, general manager at investment research for SBI Securities.
“Investors saw rising U.S. interest rates as risk factors because when rates are high, growth shares are sold. That means Japanese technology stocks also decline.”
U.S. stocks closed lower on Monday as investors grew nervous ahead of the third-quarter earnings reporting season, while U.S. Treasury yields hit multi-month highs at the end of last week in the wake of a weaker-than-anticipated September employment report. U.S. bond markets were closed on Monday for a holiday.
In Japan, technology heavyweights dragged the Nikkei lower on Tuesday, with start-up investor SoftBank Group falling 2.42%, robot maker Fanuc losing 1.66% and medical equipment maker Terumo slipping 1.39%.
Shares that rose recently on hopes of an economic reopening fell, with retailers and airlines losing 1.89% and 2.06%, respectively.
Yaskawa Electric Corp, which was among the first to report results every earnings season, extended losses despite an upward revision to its profit outlook on Friday, losing 4.34%.
Automakers rose as the yen weakened against the dollar, with Toyota Motor climbing 0.78% and Honda Motor edging up 0.2%.
Oil explorer Inpex gained 1.76% amid a spike in oil prices.
Eneos Holdings advanced 1.41% after Japan’s biggest refiner made a $1.8 billion acquisition of solar power plant operator Japan Renewable Energy to expand its low-carbon business.