Nikkei 225 climbs after bond rout eases, with Kioxia and SoftBank surging

Japan’s Nikkei 225 rebounded on Thursday as a sharp retreat in global bond yields brought buyers back to technology shares after one of the index’s worst sessions this month.

The Nikkei rose about 1% to 65,982 in morning trade, recovering part of Wednesday’s 3.2% slump to a two-week low.

The broader Topix gained roughly 0.9%. Kioxia Holdings and SoftBank Group were among the strongest performers as investors returned to stocks hit hardest by the previous session’s selloff.

Treasury intervention gives the Nikkei breathing room

The catalyst came from the US bond market. The Treasury Department said it will at least double the maximum size of liquidity-support buybacks for longer-dated government debt, raising the cap from $2 billion to at least $4 billion per operation from September 9.

Long-term Treasury yields fell sharply after the announcement.

The 30-year yield was around 5.18% in Asian trading on Thursday, while the 10-year eased to roughly 4.63%. Japanese, Australian and New Zealand bonds followed the move higher.

That provided immediate relief for the Nikkei, where richly valued semiconductor and AI-linked companies had been especially vulnerable to rising borrowing costs.

Kioxia rose almost 5% after tumbling more than 12% on Wednesday, while SoftBank recovered nearly 4% following a decline of more than 10%.

Market commentary cited by TradingKey suggested much of Kioxia’s previous fall reflected technical selling rather than a deterioration in its underlying business.

Japan’s own bond risks have not disappeared

Thursday’s bounce does not erase the pressures facing Japanese equities.

Japan’s 10-year government bond yield approached 3% this week, its highest in about three decades, as investors weighed inflation, fiscal spending and the possibility of further Bank of Japan tightening.

The yen also strengthened towards 158.20 per dollar on Thursday, a potential headwind for exporters if the move continues.

Meanwhile, Japan recorded a ¥634.5 billion trade deficit in July even as exports rose 23.2% from a year earlier.

The combination means the Nikkei remains sensitive not only to Wall Street and US yields, but also to Japan’s increasingly difficult domestic rate backdrop.

KOSPI steals the show as Fed and Iran risks linger

Elsewhere in Asia, South Korea’s KOSPI surged as much as 5.8%, easily outperforming the region after SK Hynix unveiled a 40 trillion won share buyback programme.

The chipmaker jumped more than 5%, adding another catalyst to the broader semiconductor rebound.

Hong Kong’s Hang Seng gained about 1%, while the Shanghai Composite added roughly 0.25% after China kept its one-year and five-year loan prime rates unchanged at 3% and 3.5%, respectively, for a 15th straight month.

Still, the rally faces limits. Minutes from the Federal Reserve’s July meeting showed many policymakers believed tighter policy could become necessary if inflation failed to ease, while several had already favoured a rate increase in July.

Middle East tensions add another risk. Brent remained above $90 as uncertainty around Iran and the Strait of Hormuz kept energy prices elevated.