TOKYO, Sept. 1 (Xinhua) -- Japan's benchmark Nikkei stock index closed at a one-month low Thursday, with high-technology issues following their U.S. peers lower overnight amid concerns about the U.S. Federal Reserve's continuing rate hikes.

The 225-issue Nikkei Stock Average lost 430.06 points, or 1.53 percent, from Wednesday to close the day at 27,661.47.

The broader Topix index, meanwhile, fell 27.67 points, or 1.41 percent, to finish at 1,935.49.

Local brokers said the market inherited a negative lead from Wall Street's fourth straight day of decline.

The market mood was soured, they said, by recent remarks from Cleveland Fed President Loretta Mester and New York Federal Reserve President John Williams.

Their remarks echoed those of Fed Chairman Jerome Powell's hawkish comments last week stating the U.S. central bank will continue hiking its rates "forcefully" despite bringing "some pain to households and businesses," analysts said, stoking concerns further rate hikes could force the U.S. economy into recession.

"Unfortunately, investors have turned bearish. The market was too optimistic about the Fed's stance, so Powell's remarks sounded too hawkish," Takatoshi Itoshima, a strategist at Pictet Asset Management Japan, was quoted as saying.

The European Central Bank (ECB), meanwhile, possibly announcing a 0.75 percentage point hike next week amid rising inflation, is contributing to growing concerns for the outlook of both Europe's and the U.S. economy, investment strategists said, adding that woes over a widening interest rate gap between Japan and the United States led to a selloff of the Japanese currency on Thursday.

The Japanese yen plunged to a fresh 24-year low against the U.S. dollar in Tokyo in the day, dropping to the upper 139 level against the U.S. dollar at one point, marking its lowest level since September 1998, dealers here said.

They explained the yen was sold for the U.S. dollar following Cleveland Fed President Loretta Mester saying Wednesday the Fed should hike its key interest rate to above 4 percent by early next year and that she does not "anticipate the Fed cutting the Fed funds rate target next year."

The median market consensus for rate hikes as part of the Fed's aggressive monetary policy to tame inflation that has skyrocketed to 40-year highs is up to 4 percent, from current levels of between 2.25-2.5 percent, market strategists here explained.

While the Fed, and, most likely, the European Central Bank next week, raise their rates to tame inflation, the Bank of Japan (BOJ) has stayed committed to its ultra-loose monetary policy, setting its short-term benchmark interest rates at minus 0.1 percent, while continuing to guide 10-year Japanese government bond yields to around zero percent.

The BOJ's dovish policy stance, investment analysts said, has seen the gap in interest rates between Japan and the U.S. widen, which has triggered dollar buying and the yen's weakness, as well as caused volatility in the stock market market here.

By the close of play, marine transportation, electric appliance, and oil and coal product issues comprised those that declined the most, with falling issues outpacing rising ones by 1,606 to 195 on the Prime Market, while 35 ended the day unchanged.

Technology issues were dragged down by their U.S. peers' overnight retreat, with Nikkei heavyweight Tokyo Electron dropping 3.4 percent, while Advantest lost 4 percent.

Robotics maker Yaskawa Electric lost 1.9 percent, while rival Fanuc shed 0.5 percent by the close.

Heavily weighted components weighed on the broader market, with Uniqlo clothing store operator Fast Retailing retreating 1.5 percent, while fellow heavyweight SoftBank Group reversed 0.9 percent.

On the Prime Market on Thursday, 1,100.42 million shares changed hands, dropping from Wednesday's volume of 1,332.18 million shares.

The turnover on the penultimate trading day of the week came to 2,717.00 billion yen (19.52 billion U.S. dollars). Enditem

Related

Go to Forum >>0 Comment(s)