Japanese shares give up most gains as U.S. Treasury yields weigh

TOKYO, Oct 20 (Reuters) – Japanese shares rose on Wednesday, underpinned by strong Wall Street finish, but they shed most of the gains as investors grew cautious about weak U.S. futures and rising Treasury yields.

The Nikkei share average edged up 0.14% to close at 29,255.55, after rising as much as 0.9% earlier in the session. The broader Topix inched up 0.05% to 2,027.67.

Wall Street jumped overnight, with the biggest boost from the technology and healthcare sectors amid solid quarterly reports.

The 10-year U.S. Treasury yield touched a five-month high of 1.673% during the Asian trading hours.

“Japan’s market tracked an overnight solid Wall Street finish earlier in the session but most gains were snapped as U.S. futures fell during the Asian trading hours,” said Kentaro Hayashi, senior strategist at Daiwa Securities.

“The U.S. futures weakened because investors grew cautious about rising U.S. Treasury yields. They wanted to confirm how high the yields could rise.”

Chip-making equipment maker Tokyo Electron pared most of its gains to end 0.4% higher.

Still the Nikkei was lifted by other heavyweights, with global start-up investor SoftBank Group rising 4.4%, Uniqlo clothing shop operator Fast Retailing gaining 0.63% and electronic parts maker TDK gaining 3.23%.

Brokerages and banks also led the market on higher bond yields, rising 1.52% and 1.19%, respectively.

Airlines and railway operators advanced amid hopes for an economic recovery, rising 3.14% and 1.83%, respectively.

Local media reported the Tokyo Metropolitan Government was aiming to ease COVID-19 restrictions on bars and restaurants next week as infections continue to decline.

Shipping firms were the biggest loser among the bourse’s 33 industry subindexes, with a 3.25% drop.

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