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TOKYO — Japan’s Nikkei settled lower on Monday, taking cues from Wall Street as investors braced for higher-for-longer U.S. interest rates after a slew of strong economic data.
The index sank as much as 0.59% before regaining some ground to close 0.11% lower at 27,423.96. That kept it near the middle of its trading range for the past month.
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Technology was among the biggest hit sectors, given its sensitivity to higher interest rates. Chipmaking equipment maker Tokyo Electron and startup investor SoftBank Group were the Nikkei’s biggest drag, shaving off more than 20 index points each. Tokyo Electron and SoftBank Group fell 1.88% and 2.25%, respectively.
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Of the Nikkei’s 225 components, 126 rose versus 96 that fell, with three flat.
The broader Topix rose 0.22% to 1,992.78, after starting the day in negative territory.
In the near term, “it’s hard to think that there would be some development that would drive the Nikkei to regain 28,000,” said Maki Sawada, a strategist at Nomura Securities, who expects the index to stick to its recent range around 27,500 this week.
At the same time, “unless there is some news, it doesn’t seem like the market will fall dramatically from here,” she added.
Hotter-than-expected U.S. inflation data on Friday fueled bets for a higher interest rate peak from the Federal Reserve. Several Fed officials are on speaking duty this week, and investors will also be watching ISM measures of manufacturing and services.
The yen was marginally higher at 136.35 per dollar, after earlier reaching its weakest level in more than two months at 136.58.
Incoming Bank of Japan Governor Kazuo Ueda said the country’s trend inflation must heighten significantly for the central bank to consider tightening monetary policy.
Automakers were overall firm, with Honda and Nissan eking out slight gains, while Toyota dipped.
Sony added 0.4%, while Nintendo declined 1.87% following a downgrade by Citi. (Editing by Nivedita Bhattacharjee and Subhranshu Sahu)
