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TOKYO: Tokyo shares opened down Monday, as global inflation worries escalated on fresh US data and drove down Wall Street, especially high-tech issues.

The benchmark Nikkei 225 index fell 2.63 percent, or 731.04 points, to 27,093.25 in morning trade, while the broader Topix index lost 2.05 percent, or 39.86 points, to 1,903.23.

The dollar continued to advance against the yen, which was moving toward the lowest point in two decades.

The US unit stood at 134.89 yen on Monday in Tokyo, 134.42 yen on Friday in New York.

The market headed south as global investors worried that the latest US inflation data, which came out above the market’s expectations, may press the US Federal Reserve to shift toward more aggressive rate hikes.

Tokyo shares firm in morning trade

“The US consumer price index in May, released last week, showed the biggest rise in four decades,” Okasan Online Securities said in a note.

“It faded the market’s hopes that inflation was peaking out. “US shares faced broad selloffs, particularly high-tech shares. The Tokyo market is likely to open the new week in difficult condition,” it said.

For the immediate future, global investors will focus on the next policy meeting of the US Federal Reserve, with Fed chair Jerome Powell meeting the press after the decision on Wednesday.

“The market is now thinking much more about the Fed driving rates sharply higher to get on top of inflation and then having to cut back as growth drops,” Stephen Innes of SPI Asset Management wrote in a note.

He said a 50 basis point rate hike from the Fed this week was a “done deal” and also predicted another 50 point hike in September.

Meanwhile the dollar was likely to stay buoyant with the Bank of Japan in no mood to change its super easy monetary policy for the foreseeable future, Innes added.

Among major shares, Sony Group dropped 3.67 percent to 11,685 yen. Nintendo fell 1.92 percent to 57,810 yen.

Toyota gave up 2.52 percent to 2,148.0 yen.

Major logistics firm Nippon Yusen fell 1.43 percent to 9,670 yen.

Uniqlo-producer Fast Retailing fell 2.67 percent to 67,330 yen.

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