Tokyo stocks close lower on concerns about Fed monetary tightening

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Tokyo stocks closed lower on strengthened concerns that the US Federal Reserve will begin to tighten its monetary policy amid solid US jobs reports and earnings, with sentiment also dampened by inflation concerns and rising prices for crude oil.

The 225-issue Nikkei Stock Average lost 191.12 points, or 0.70 per cent, from Friday to close on Monday at 27,248.87, Xinhua news agency reported.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, fell 4.57 points, or 0.24 per cent, to finish at 1,925.99.

Local brokers said that strong US jobs data and wage figures released late last week weighed on the market here on Monday as the figures underscored expectations the Fed will speed up measures to tighten its monetary policy.

“Investors believe the Fed will speed up its rate hikes following the release of strong jobs data and are worried that stocks that have the potential to grow, such as high-tech and chip-related large caps, will be adversely affected by the move,” Masahiro Ichikawa, Chief market strategist at Sumitomo Mitsui DS Asset Management Co., was quoted as saying.

While the majority of market analysts were in agreement as to the likelihood of the Fed’s monetary policy being tightened at an earlier juncture than initially expected, some said that real market volatility wouldn’t kick in a unit the Fed’s meeting in March.

“The bullish US jobs report has strengthened concern about aggressive monetary tightening, but market moves should be fairly calm until the Fed’s meeting in March,” one marker strategist said, adding, “This week, the main focus should be earnings.”

By the close of play, marine transportation, precision instrument and metal product issues comprised those that declined the most, while issues that fell outpaced those that rose by 1,313 to 783 on the First Section, while 87 ended the day unchanged.

In contrast to the previous week, firms reporting earnings and profit guidances that missed median expectations weighed on the market, including Olympus Corp. tumbling 12.2 per cent to become the Nikkei’s biggest drag.

Automaker Subaru reversed 4.9 per cent, after downwardly revising its earnings, partly due to the global chip shortage.

Among chip-related and component makers, Taiyo Yuden slumped 9.7 per cent, while Advantest lost 2.7 per cent on disappointing earnings. Similarly, Tokyo Electron ended the day 1.4 per cent lower.

Heavily-weighted Nikkei component Fast Retailing, owner of the Uniqlo chain of casual clothing stores, weighed on the market, dropping 1.6 per cent by the close.

Bucking the downward trend, Mitsui Fudosan was a notable winner, climbing 2.5 per cent, after upgrading its earnings outlook and announcing a buyback scheme of its shares.

On the main section on Monday, 1,302.18 million shares changed hands, dropping from Friday’s volume of 1,357.65 million shares.

The turnover on the first trading day of the week came to 3,014.18 billion yen ($26.21 billion).

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