Japan's bank shares are dropping as rates BoJ rate hike's prospects injure

A measure of Japanese bank shares has dropped more than 7%, most since August, as concerns about the impact of the stricter than expected US rates on Japan’s economy fueled, the central bank could interrupt the rate hikes. Banks were the heaviest trek on the Topix, which dropped to 4.3%, as investors turned off the risk of Donald Trump’s announcement of a 24% levy on Japan. Shares of Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. lost more than 8% at one point. The decline comes because financial shares have exceeded the benchmark so far this year with the hope that the ongoing interest rate hikes by the Bank of Japan would increase the earnings of lenders. But the concern that US trade policies could delay Japan’s economy, which leaves the BOJ less space to raise rates, makes the banks look less attractive. “There is now a greater possibility that the BOJ will suspend interest rate hikes, leading to pressure on bank shares,” says Jumpei Tanaka, head of investment strategy at Pictet Asset Management. Tanaka added that the additional 24% tariffs on Japanese goods will have a significant impact on Japanese shares, especially those that depend on foreign demand. Japan’s overnight index exchanges now indicate an approximately 70% chance of a rate hike by September, of about 90% Wednesday. Bank shares have risen with the assumption that higher interest rates would increase their net interest in the long -term loans, says Zuhair Khan, a UBP Investments fund manager. “In my opinion, too much has been praised,” he said. “If there is a chance that interest rates are not rising as much as expected, or that there is a delay as they rise, bank shares must fall.” With the help of Umesh Desai. © 2025 Bloomberg MP This article was generated from an automatic news agency feed without edits to text. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. Business NewsMarketsstock Marketjapan’s bank shares fall as rates injure