Nikkei erases gains amid persistent Fed tightening concerns


The benchmark Nikkei stock average swept away earlier gains to end slightly lower Friday, as concerns over U.S. monetary policymakers’ new, hawkish projections remained strong.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange closed 54.25 points, or 0.19%, lower at 28,964.08, extending its losing streak to three days after giving up 272.68 points Thursday. The key market gauge ended below 29,000 for the first time since June 11.

The Topix index of all first-section issues slid 17.01 points, or 0.87 %, to end at 1,946.56, following a 12.29-point fall the previous day.

The Nikkei was buoyant in the morning, thanks to active buying of component technology issues spurred by the tech-heavy Nasdaq composite index’s rebound in the U.S. market Thursday led by a fallback in long-term interest rates.

On the other hand, the U.S. interest rate decline led to selling of financial stocks such as banking groups, to which the Topix is vulnerable.

But the tech buying was not powerful enough to let the Nikkei go further north, with sentiment remaining dampened by the U.S. Federal Reserve’s start of talks to taper its quantitative easing and suggestion of earlier-than-anticipated interest rate hikes at its Federal Open Market Committee meeting through Wednesday.

Stocks also met with selling to square positions or lock in gains ahead of the weekend, pushing down the Nikkei to around the previous day’s closing level in the afternoon.

The market was little affected by the Bank of Japan’s announcement Friday that the central bank will keep its easing policy, brokers said.

“Some players stepped up selling as they took the halt in U.S. long-term interest rates’ uptrend as a sign that U.S. economic recovery is coming to an end,” said Kazuo Kamitani, strategist at Nomura Securities Co.

Echoing Kamitani, Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., pointed out that economically sensitive cyclical issues were sold markedly as were their U.S. peers the previous day.

On the TSE first section, decliners outnumbered gainers 1,570 to 540 while 83 issues were unchanged.

Among the loss-making financials, insurer Dai-ichi Life plunged 5.68 % and banking group Sumitomo Mitsui dropped 2.57 %.

Shipping firm Nippon Yusen and steelmaker JFE tumbled 7.69% and 4.67%, respectively, amid cyclical sell-offs.

Exporters such as automakers retreated as the dollar eased against the yen.

Meanwhile, popular semiconductor-linked issues included silicon wafer producer Shin-Etsu Chemical, up 1.48%, and passive component maker Taiyo Yuden, up 1.45%.

Eisai spiked 5.92% after announcing an exclusive tie-up deal with U.S. drug maker Bristol-Myers Squibb Co. over the Japanese pharmaceutical firm’s cancer drug.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average fell 70 points to end at 28,930.

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