Japanese shares traded mostly lower on Monday as investors assessed weaker-than-expected economic growth and the potential impact of tensions in the Middle East on inflation and bond yields, Reuters reported.
The benchmark Nikkei 225 edged 0.01% lower to 68,721.56 in early trading, while the broader Topix fell 0.48% to 4,177.02.
Japan's economy grew at an annualised rate of 1.1% in the April-June quarter, below the 2.0% median forecast, government data showed on Monday. Growth was constrained by flat private consumption and a 1.2% decline in capital spending, raising concerns about the strength of domestic demand.
At the same time, escalating tensions in the Middle East and disruptions to tanker traffic through the Strait of Hormuz have kept oil prices elevated, adding to inflation concerns and pushing Japanese government bond yields to multi-decade highs.
Reuters reported that Nomura Securities equities strategist Wataru Akiyama sees rising short- and long-term interest rates as a potential cap on gains in Japanese equities. He also noted that weaker-than-expected GDP growth could indicate that inflationary pressures and a slowdown in the U.S. economy are beginning to weigh on Japan.
Market breadth was weak, with 71 stocks advancing on the Nikkei 225, compared with 151 decliners and three unchanged.
Kioxia Holdings was the top gainer, rising 5.14%, followed by Archion, which advanced 5.07%, and Nexon, up 3.44%.
On the losing side, Ebara plunged 9.40%, putting it on course for its steepest one-day decline since November 2025. Trend Micro dropped 8.94%, while Dentsu Group fell 7.91%.
Investors are likely to continue monitoring developments in the Middle East, oil prices and Japanese bond yields, alongside upcoming economic data, for clues on the outlook for inflation, domestic demand and monetary policy.
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