Sumitomo Mitsui Financial Group shares fell 1.6% on Thursday. A selloff in U.S. Treasuries pushed Japan's 10-year government bond yield to 3.055%. This represents the highest level for the yield since August 1996.
Rising yields and a weaker yen pressure bank profitability and balance sheets. These factors devalue existing bond portfolios and increase funding costs for major lenders.
The downturn affected the broader Japanese banking sector. Mitsubishi UFJ Financial Group and Mizuho Financial Group shares also declined. Investors remain anxious regarding the rapidly changing interest rate environment.