FX.co ★ Japanese Shares Fall as Banks Weigh

Japanese stocks continued their downward trend for the fifth straight session on Wednesday, driven by a significant selloff in banking shares due to increased volatility in the bond market, which raised worries about possible trading losses. The Nikkei 225 declined by 0.41% to 51,774, while the more comprehensive Topix Index decreased by 0.99% to 3,590. The financial sector spearheaded the downturn, with Mitsubishi UFJ dropping 3.5%, Sumitomo Mitsui declining 3.6%, and Mizuho Financial falling 3.9%. Earlier this week, Japanese Government Bond (JGB) yields reached new heights due to fiscal concerns tied to proposals for reducing the 8% sales tax on food. These yields later eased after Finance Minister Satsuki Katayama called for calm among market players. Additionally, investors are preparing for a snap election on February 8, as Prime Minister Sanae Takaichi seeks to solidify power and advocate for a more expansionary fiscal policy. Meanwhile, the Bank of Japan is anticipated to maintain its current policy stance later this week.