Japanese stocks closed mixed on Wednesday, with tech shares rising ahead of expected results, while higher oil prices and a weaker yen negatively impacted the overall market.

The Topix index rose 0.45% to close at 4,033.13 points. The Nikkei index of leading shares rose as much as 2.05%, before retreating in the afternoon session to close down 0.18% at 66,115.60 points. The Philadelphia Semiconductor Index jumped 5.2% overnight, despite the escalating conflict in the Middle East, which led to higher oil prices and the US announcement of new tariff measures.

Maki Sawada, strategist at Nomura Securities, said investors are awaiting results from major technology companies to see how they handle rising costs, while taking cues from the South Korean KOSPI index, which is heavily weighted toward tech stocks.

"If these indicators are positive, they could dispel these concerns and trigger a rise in stock prices," Sawada added. "Concerns about the impact of higher costs on corporate profits, partly due to rising crude oil futures prices, are casting a shadow over the entire stock market."

The yen fell to its weakest level in 40 years, touching 163.24 yen to the dollar, rattling domestic markets, while Japanese imports surged to a record high in June, according to government data, as the currency weakened and oil prices rose.

Technology suppliers and chipmakers led gains on the Nikkei, which saw 122 stocks rise versus 102 fall. The biggest gainers on the index were Mitsui Kinzoku, up 7.38%, followed by Taiyo Yuden, up 6.73%, and Kioxia Holdings, up 5.26%.

The biggest losers were all in the consumer goods sector; J. Front Retailing fell 5.75%, followed by Shiseido, down 5.38%, and Takashimaya, down 4.91%.

Yields Rise

Japanese government bond yields rose on Wednesday, as growing concerns about inflation and public finances overshadowed strong demand at a sale of ultra-long-term bonds.

The benchmark 10-year Japanese government bond yield rose 3 basis points to 2.750%, and the 5-year yield rose 2.5 basis points to 1.965%.

Yields move inversely to bond prices. Japanese government bond yields rose in line with global gains after US Treasury yields hit a two-month high, and euro zone yields edged up; escalating US-Iran tensions pushed oil prices higher and revived inflation and rate hike concerns in major bond markets.

In an economic plan finalized on Tuesday, the government of Prime Minister Sanae Takaichi said it would work with the private sector to direct investments of more than 370 trillion yen ($2.28 trillion) into targeted sectors through fiscal 2040.

"The rise in crude oil prices driven by escalating tensions in the Middle East is pushing inflation expectations higher... There remains strong concern that the government's responsible and proactive fiscal policy will lead to increased government bond issuance and fiscal expansion in the future," said Takayuki Miyajima, chief economist at Sony Financial Group, in a note.

The Ministry of Finance sold about 300 billion yen in 40-year Japanese government bonds on Wednesday. The bid-to-cover ratio, an indicator of demand, rose to 2.82, the highest since March 2025.

Market participants remain focused on the Bank of Japan's next monetary policy meeting, with growing expectations that the central bank will keep interest rates unchanged next week, but may signal a faster pace of tightening as inflation risks persist. The 20-year JGB yield rose 3 basis points to 3.630%. The 30-year yield rose 0.5 basis point to 3.890%, while the 40-year JGB yield, Japan's longest maturity, rose 1 basis point to 3.9%.