Nikkei set for worst week in three months as Fed stance rattles markets

Trend Micro Incorporated

02/09/2022 04:30

SINGAPORE, Sept 2 (Reuters) - Japan's Nikkei share average
was headed for its worst week in nearly three months on Friday,
as investor concerns over aggressive interest rate hikes
prompted heavy selling worldwide, with a weaker yen providing
only a smidgen of comfort.
    The Nikkei  .N225  was down 0.2% at 27,604.37 by the midday
break and has lost 3.6% this week. The broader Topix  .TOPX 
fell 0.5% and had touched a six-week low of 1,926.05 in morning
trade. The index lost 2.7% so far this week.
    Market expectations for U.S. interest rates have crept
steadily higher - hurting appetite for stocks - since last
week's speech from Federal Reserve chair Jerome Powell, who
reiterated his focus taming inflation above all.
    "Many people in the equity markets, including Japan, now
think that the upside is very limited, because of that (hawkish)
stance of the Federal Reserve," said Masayuki Kichikawa, chief
macro strategist at Sumitomo Mitsui Asset Management in Tokyo.
    Tech firms have faced a particular clobbering from the
rate-hike view, and the sector was the largest drag on the
broader market on Friday. 
    Shares of Trend Micro  4704.T  fell 2.7% and have lost more
than 8% for the week, as the cybersecurity firm recoils from a
two-decade high scaled last month.
    Department store operator Isetan Mitsukoshi  3099.T  rose
3%.
    Top movers included gaming company Nexon  3659.T , which
dropped about 5% and touched a six-month low after reporting
quarterly earnings on Thursday.
    Focus has shifted to U.S. labour data due later on Friday,
which if strong could reinforce expectations that the Fed hikes
rates by a steep 75 basis points later in September, and on the
currency market where the yen is wallowing at a 24-year low.
    "Of course, a weakened yen has been helping the profits of
the exporting companies," said Sumitomo's Kichikawa.
    "But it's not clear whether the yen weakness is positive for
the economy and equity pricing in Japan  because at the moment,
Japan's trade balance is in the negative territory."
    

 (Reporting by Rae Wee; Writing by Tom Westbrook; Editing by
Sherry Jacob-Phillips)
 ((tom.westbrook@tr.com; +65 6973 8284;))