Tokyo stocks close lower on Fed rate hike bets

TOKYO: Tokyo stocks closed lower Thursday as minutes from the Federal Reserve’s most

recent meeting fuelled expectations of more aggressive interest rate hikes to bring inflation under control.

The benchmark Nikkei 225 index dropped 1.69 percent, or 461.78 points, to 26,888.57, while the broader Topix index fell 1.56 percent, or 30.01 points, to 1,892.90.

The dollar stood at 123.59, slightly softer from 123.79 on Wednesday in New York.

Falling US shares depressed sentiment, after the US Federal Reserve’s meeting minutes revealed that several members expressed support in March for raising interest rates by half a percentage point rather than the quarter percentage point officially decided.

The Nasdaq gave up 2.2 percent while the Dow slipped 0.4 percent.

“The Nikkei started with losses... as the Nasdaq dropped by more than two percentage points for the second straight day” on the Fed’s minutes, Shuji Hosoi, senior strategist at Daiwa Securities, said in a commentary.

Another factor that the minutes disclosed — the drop-off in the US central bank’s asset-purchasing easing programme — prompted rises in bond yields, “that also weighed on Japanese high-tech firms”, he said.

In Tokyo, commodity and chip-linked shares dropped sharply, with oil developer Inpex declining 2.44 percent to 1,435 yen and Sumitomo Metal Mining falling 3.32 percent to 6.053 yen.

Chip-making equipment manufacturer Tokyo Electron plunged 5.44 percent to 55,190 yen and chip-testing equipment maker Advantest sank 5.44 percent to 8,690 yen.

Toyota ended down 0.98 percent at 2,168.5 yen and SoftBank Group closed down 1.99 percent at 5,654 yen.