Japan’s Nikkei posts biggest fall in four weeks after hawkish Fed comments

TOKYO: Japan’s Nikkei share average fell on Wednesday by its most in nearly four weeks, tracking Wall Street as hawkish comments from US Federal Reserve officials raised prospects of bigger rate hikes and stoked worries about a slowdown in economic growth.

The Nikkei lost 1.58% to close at 27,350.30, posting its biggest daily fall since March 11. The broader Topix slipped 1.34% to 1,922.91.

Wall Street’s main indexes fell overnight, dragged down by tech and other growth stocks, after Fed Governor Lael Brainard said she expected rapid reductions to the central bank’s balance sheet alongside increases to the benchmark interest rate.

“Brainard’s remarks hit investor sentiment, and the overnight decline in Nasdaq prompted a sell-off in technology stocks today,” said Takatoshi Itoshima, a strategist at Pictet Asset Management.

“But overall, the Japanese market is relatively cheap, so I expect some demand for buying stocks at a decline.” Minutes of last month’s Fed meeting, due at 1800 GMT, may add detail to policymakers’ thinking about how quickly they could move to reduce bond holdings and lift interest rates.

In Japan, chip-making equipment maker Tokyo Electron dragged down the Nikkei the most, falling 3.63%, followed by technology investor SoftBank Group, which fell 2.81%. Air-conditioner maker Daikin Industries lost 3.52%.

Refining was the only sector that rose among the Tokyo Stock Exchange’s 33 industry sub-indexes, advancing 1.35%.

Cosmo Energy Holdings surged 13.44% after a fund backed by activist investor Yoshiaki Murakami obtained a 5.81% stake in the crude oil importer and refiner.

Peer Idemitsu Kosan rose 1.67%. Eneos Holdings reversed its early gains to edge down 0.2%.