Nikkei Drops 1.9% as Oil Prices and US Rate Fears Hit Asian Markets
Tokyo stocks fell sharply on Friday as rising oil prices and US inflation data weighed on investor sentiment.
The Nikkei 225 index closed down 1.9% at 64,011 points. Intraday losses reached 3.2% before a partial recovery. The broader Topix index fell 0.7% to 4,027 points. Chinese markets also declined, with the Shanghai Composite dropping 1.1% to 3,891 points. The CSI 300 index lost 0.8% to end at 4,511 points.
Investors reacted to strong US inflation data released on Friday. Consumer prices rose 3.4% in August, driven by high energy costs. This outcome reinforced expectations of a Federal Reserve interest rate hike next week. Market pricing indicates a 65% probability of a rate increase at the upcoming meeting.
US monetary policy shifts market expectations
Remarks from Fed Governor Christopher Waller increased speculation on a hawkish turn. He suggested the central bank could act quickly if inflation remains elevated. Takuma Ikemoto, analyst at Tokai Tokyo Intelligence Lab, noted that all three major US indices fell in response. He stated that this pressure transmitted directly to Japanese equities.
Energy costs drive sector losses
Rising crude oil prices weighed heavily on specific Japanese stocks. Resonac Holdings shares fell approximately 10%, leading the decliners. Kioxia Holdings, a major memory chip manufacturer, dropped 7%. These losses reflected broader concerns over input costs and margin compression.
Asian markets mirror Wall Street weakness
Risk-off sentiment dominated trading sessions across Asia. Chinese investors reduced exposure to equities amid global uncertainty. The decline in Shanghai and Shenzhen indices mirrored the trend in Tokyo. According to Handelsblatt Finanzen, the combination of oil prices and US rate fears created a synchronized sell-off.
