Japanese stocks are lower in early trade, tracking Wall Street's losses overnight. U.S. equities' declines come amid a global bond selloff that has sent long-term yields to their highest levels in years. The Nikkei Stock Average is down 2.7% at 65604.25.

"Equity investors have finally started to respond by going a bit defensive," Fawad Razaqzada of FOREX.com says in an email. "The overcrowded AI trade is losing momentum as yields press higher," the market analyst adds. Among the worst performers on the Nikkei, Renesas Electronics and Fujikura slip 7.2% each and Sumitomo Electric Industries is down 6.7%.

The dollar is at 159.46 yen, compared with Y159.73 around Tuesday's Tokyo market close. The decline reflects growing concerns over rising yields and their impact on equity valuations, particularly in technology-heavy sectors.