TOKYO: Tokyo stocks tumbled more than two percent Friday morning, tracking a selloff on Wall Street fuelled by fears of a protracted conflict in Ukraine and after more data confirming the blistering pace of US inflation.
The dollar also rose to its highest level against the yen in five years as the spike in US prices fanned expectations the Federal Reserve will act more more aggressively in hiking interest rates.
The benchmark Nikkei 225 index fell 2.44 percent, or 625.66 points, to 25,064.74 at the break, while the broader Topix index was down 1.99 percent, or 36.34 points, at 1,793.69.
After US markets sank owing to “a surge in the US consumer price index and no progress after talks between the foreign ministers of Russia and Ukraine, Japanese shares are seen starting with falls”, said Toshiyuki Kanayama, senior market analyst at Monex.
The dollar climbed to 116.38 yen, its highest rate since January 2017.
“US Treasury yields have been on a rising trend, obviously with a lot of volatility. That has pulled the yen weaker,” Ray Attrill, head of forex strategy at National Australia Bank, told AFP, noting that the yield on the 10-year note had risen to two percent.
US consumer prices in February have also continued to rise, reaching a new 40-year high of 7.9 percent owing to the cost of gasoline, food and housing.
The Fed is poised to raise interest rates next week as it tries to rein in prices, having slashed them to zero at the start of the pandemic.
But the war in Ukraine is driving energy and food prices higher, which will complicate the Fed’s efforts to sustain the economic recovery.
In share trading, Fast Retailing was down 2.55 percent at 58,580 yen after saying its casualwear business Uniqlo will suspend operations in Russia, backtracking on an earlier decision to keep its stores in the country open.
Toyota dived 5.01 percent to 1,848 yen as a report said the car giant will reduce domestic production in April by 20 percent compared with its earlier plans.
Toshiba dropped 1.58 percent to 4,348 yen after an influential advisory firm opposed the company’s plans to split into two.