Japan's Nikkei loses ground as investor focus shifts to BOJ, Fed meetings
Japan's Nikkei 225 Index fell 1% to 50,491.87, influenced by rising domestic interest rate expectations and an 18-year peak in Japanese government bond yields. Investors are focused on upcoming BOJ and Fed meetings, with speculation of a BOJ rate hike and high odds of a Fed rate cut. Major decliners included Trend Micro and Bridgestone, while Ibiden and SoftBank Group were among the gainers.
(Updates with closing prices)
By Rocky Swift
TOKYO, Dec 5 (Reuters) - Japan’s Nikkei share average lost ground on Friday, pausing after a recent rally, as expectations of rising domestic interest rates weighed on sentiment.
The Nikkei 225 Index (.N225) slid 1% to close at 50,491.87, trimming its weekly gain to 0.5%. The broader Topix (.TOPX) fell 1.1%.
An 18-year peak in benchmark Japanese government bond yields dampened equities after a three-day rally, Nomura Securities strategist Maki Sawada said, as investors awaited policy decisions from the Bank of Japan and the U.S. Federal Open Market Committee (FOMC).
“Regarding the rise in the 10-year yield, one factor is growing speculation that the Bank of Japan may raise rates at its December meeting,” Sawada said. “With the FOMC looming next week, I think Japan’s stock market is likely to face some selling pressure.”
The BOJ is likely to raise rates this month with the government expected to tolerate such a decision, Reuters reported on Thursday.
Meanwhile, traders are pricing in around 86% odds of a Fed rate cut next Wednesday, and potentially two-three more reductions next year, according to LSEG-compiled data.
There were 42 advancers on the Nikkei against 181 decliners. The largest losers in the index were Trend Micro (4704.T) , down 8.9%, followed by tyre manufacturer Bridgestone (5108.T) , which lost 4.7%.
The largest gainers were electronic component maker Ibiden (4062.T) , up 6.9%, followed by major artificial intelligence investor SoftBank Group (9984.T) , which rose 6%.
