Japan's Nikkei slides on US rates caution, eyes worst week in a month

TOKYO: Japan's Nikkei index slipped on Friday, keeping it on course for its worst week in a month, as it tracked weakness in US stock futures amid worries about the impact of aggressive policy tightening by the Federal Reserve.

Toyota weighed amid Australian media reports that the automaker could face an A$2 billion ($1.5 billion) payout over faulty diesel particulate filters.

Convenience store operator Seven & i Holdings also slumped after disappointing with its earnings outlook, despite also announcing a revamp of its board.

The Nikkei ended the morning session 0.25% lower at 26,820.37, after touching as high as 27,185.23 during the session. For the week, it has lost 3.06% — the most since the period ended March 11.

The broader Topix slid 0.31% to 1,887.07, on track for a 2.94% weekly decline, which would be its worst performance in six months.

Fed policymakers are ready to start cutting the central bank's asset holdings from May and are prepared to move rates higher 50 basis points at a time to curb inflation, meeting minutes and remarks from officials showed this week.

Tokyo shares open lower on rising US yields

While a late rally lifted Wall Street indexes to a positive close overnight, they are all down for the week, led by a 2.5% loss for the rates-sensitive Nasdaq. Nasdaq futures were up a modest 0.1% in Asia, and S&P 500 futures were nearly flat.

"The recovery in the Nasdaq is shallow, so it can't really provide much support to Japanese stocks," said a trader at a domestic securities firm.

"After the Nikkei climbed above 27,000, profit-taking pulled it back below."

Transport equipment was the worst performer among the Tokyo Stock Exchange's 33 sub-sectors, declining 2.67%, led by Toyota's 3.9% slide. Seven & i's 4.31% drop made it the second-biggest percentage decliner on the Nikkei, after logistics company Nippon Express Holdings' 6.18% tumble.

Camera maker Nikon was the Nikkei's biggest winner, jumping 6.13% after announcing a 30 billion yen ($242 million) share buyback.