Sumitomo Mitsui Financial's shares dropped 3% in early Tokyo trading after Bloomberg reported the bank plans to double its government bond holdings. The move comes as Japan's debt concerns intensify following Prime Minister Takaichi's snap election call and proposed fiscal stimulus.

Investors reacted negatively to the news, pushing the Nikkei 225 index lower. The bank's peers Mitsubishi UFJ and Mizuho also fell 3% to 4%, reflecting broader market unease. Sumitomo's CEO Arihiro Nagata indicated the bond purchases would occur after debt market conditions stabilize.

Japan's government bond yields surged to multi-decade highs this week, rattling markets. With Tokyo already carrying the world's largest public debt burden, Sumitomo's planned 10.6 trillion yen portfolio expansion raised concerns about inflation and monetary tightening. Markets will watch closely for similar moves by other major banks.

The sell-off underscores growing investor skepticism toward aggressive fiscal spending without clear funding mechanisms. As yields climb, Japanese banks face pressure between supporting government financing and managing their own balance sheet risks in a rising rate environment.