Japanese Stocks Fall as Inflation Fears Hit Cyclical Shares

Japanese stocks fell for a second day, tracking a Wall Street selloff as persistently high oil prices revived inflation concerns and weighed on equities near record highs.

Cyclical stocks including trading houses, banks and materials led the decline. The Topix fell 1% to 4,111.35 as of 9:07 a.m. Tokyo time, while the Nikkei declined 0.6% to 69,630.12.

AI and semiconductor shares, along with cyclical stocks such as steelmakers and nonferrous metals producers, are likely to remain under selling pressure, said Takashi Ito, a senior strategist at Nomura Securities. Still, solid expectations for domestic corporate earnings should limit losses, making a decline as steep as Wednesday’s unlikely, he said.

Kioxia Holdings Corp. rose more than 3% after Japan Exchange Group Inc. announced that the memory maker’s free-float weight will rise to 50% from the previous 15% in its regular review. Nidec Corp. dropped more than 3% after Oasis Management Co. urged the embattled manufacturer to evaluate privatization options as grapples with an accounting scandal that has put it at risk of delisting.

Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix decline, decreasing 1.5%. Out of 1,634 stocks in the index, 150 rose and 1,444 fell, while 40 were unchanged.

Japan Exchange Group unveiled the biggest-ever reshuffle of the Topix on Wednesday, a revamp that shrinks one of Asia’s broadest major equity benchmarks and intensifies pressure on Japanese companies to boost their market appeal.