TOKYO: Japanese shares fell on Monday, tracking Wall Street losses after Federal Reserve Chairman Jerome Powell indicated near-term interest rate hikes, with heavyweights leading the decline. By 0224 GMT, the Nikkei share average was down 2% at 26,574.90, while the broader Topix had lost 1.57% at 1,875.25.

Wall Street tumbled more than 2.5% on Friday, as surprise earnings news and increased certainty around aggressive near-term interest rate rises took a toll on investors.

Powell indicated the US central bank was preparing a half-point interest rate hike at its May meeting, with more to come.

“The US markets fell too much on Friday on the rate hike comments, and the Japanese market reacted to the US market too much today,” said Shuji Hosoi, senior strategist at Daiwa Securities.

Heavyweights dragged the Nikkei lower, with Uniqlo clothing owner Fast Retailing falling 4.41%, technology investor SoftBank Group down 7.73% and air-conditioning systems maker Daikin Industries losing 3.31%.

Japanese shares track Wall St strength

All except one of the 33 industry sub-indexes on the Tokyo Stock Exchange fell, with oil explorers leading the decline as oil prices dropped.

Airlines fell 3.03%, with ANA Holdings losing 3.95% after the airline cut its earnings forecast and flagged 145 billion yen in net loss for the financial year.

Rival Japan Airlines slipped 1.91%. Nissan Motor fell 3.99% after a report that its top shareholder Renault SA was exploring a potential stake sale.

Daiwa’s Hosoi said the market awaits comments from Bank of Japan Governor Haruhiko Kuroda on the latest currency move after the central bank’s policy meeting this week.

“If he does not say anything about the yen’s weakness, then the market would assume the central bank allow the yen to decline further, which will cause another sharp currency move and that is negative to the stock market,” Hosoi added.