Japan's Nikkei slumps as Fed hike bets, soaring oil weigh

TOKYO: Japan’s Nikkei slumped on Friday amid renewed concerns over US rate hikes and a surge in oil prices that fuelled inflation worries.

The benchmark Nikkei 225 gauge fell 1.93% to close at 64,011.34, giving it a 0.4% decline on the week.

The gauge earlier sank as much as 3.16%.

The broader Topix slipped 0.65% to 4,028.30. US equities retreated overnight as higher Treasury yields and August producer-price data heightened expectations for a Federal Reserve rate hike.

Fed Chair Kevin Warsh has signalled a shift away from forward guidance, keeping investors alert to upcoming inflation figures.

Meanwhile, geopolitical tensions persisted as the US-Iran confrontation continued to disrupt energy markets.

“With Fed Chair Warsh signalling a focus on curbing inflation, a wait-and-see stance is likely to strengthen in the Japanese stock market,” Takuma Ikemoto, market analyst at Tokai Tokyo Intelligence Lab, said in a note.

Technology and AI-related shares led the Nikkei lower. There were 95 advancers on the gauge against 128 decliners and two unchanged.

The largest losers were Resonac Holdings, down 10.68%, followed by Kioxia Holdings, 6.99% lower, and Toppan Holdings, which lost 6.95%.

The largest gainers were LY, up 3.44%, followed by Kawasaki Kisen Kaisha, 2.94% higher, and Dai-Ichi Life Holdings, which gained 2.73%.