Japan's Nikkei slips after Fed dashes hopes of March rate cut

TDK

01/02/2024 06:49

(Updates levels at 0615 GMT)
    By Brigid Riley
       TOKYO, Feb 1 (Reuters) - Japan's Nikkei share average
ended lower on Thursday, as investors were disappointed after
U.S. Federal Reserve chair Jerome Powell's comments doused hopes
of a potential interest rate cut in March.
    The Nikkei  .N225  finished down 0.76% at 36,011.46, after
brushing below the key 36,000 level earlier in the session.
    The broader Topix  .TOPX  fell 0.67% to 2534.04.     
    Powell expressed good news on the battle against inflation
at the conclusion of the central bank's two-day meeting on
Wednesday, but said rate cuts would not be appropriate until
there is "greater confidence that inflation is moving" towards
the central bank's 2% target.
    "It's tough to escape the Fed story as the major driver of
price action today," said Capital.com's senior financial market
analyst Kyle Rodda. 
     "The lower odds of an March cut have the marginal effect of
tightening financial conditions, so stocks have to pull back to
reflect that."  
    Japanese indexes tracked overnight weakness in Wall Street,
with U.S. stocks falling after the latest Fed communications.
    A stronger yen also weighed on Japanese exporters.  FRX/  
    The Topix's automaker sub-index  .ITEQP.T  tumbled 1.41%.
Heavyweights Toyota Motor  7203.T  and Honda Motor  7267.T  fell
1.83% and 1.85%, respectively.
    Of the Nikkei's 225 constituents, only 51 rose, while 170
declined. 
    In individual stocks, domestic earnings remained the
dominating theme among the best performers of the day.
    Shares of TDK Corp  6762.T  gained 5.48%, while Nomura
Holdings Inc  8604.T  - Japan's biggest brokerage and investment
bank company - was up 5.15%.
    Nomura Holdings briefly touched its highest levels since
2015, following an announcement on Wednesday that the company
would buy back up to 4% of its own shares after reporting record
net revenue from its investment banking division.
    Pharmaceutical company Daiichi Sankyo Co Ltd  4568.T  was
the third-best performer, climbing 5.13%.
    Aozora Bank  8304.T  came in at the bottom after dropping
21.49%, followed by Sumitomo Pharma Co  4506.T , losing 18.43%.

    

 (Reporting by Brigid Riley; Editing by Rashmi Aich and Sherry
Jacob-Phillips)
 ((brigid.riley@thomsonreuters.com;))