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Tokyo stocks sink after hawkish Fed minutes

The Associated Press
People walk by an electronic stock board of a securities firm in Tokyo on Thursday.

TOKYO (Jiji Press) — Tokyo stocks tumbled Thursday after the U.S. Federal Reserve’s hawkish policy meeting minutes sent their peers on Wall Street tumbling.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange plunged 844.29 points, or 2.88%, to end at 28,487.87, after gaining 30.37 points Wednesday.

The TOPIX index of all TSE first-section issues finished down 42.26 points, or 2.07%, at 1,997.01, following a 9.05-point rise the previous day.

The Tokyo market was weak after all three key U.S. stock indexes sank Wednesday on the minutes of the Fed’s December meeting that showed that the U.S. central bank may raise interest rates and reduce its balance sheet earlier than expected if inflation continues to be high.

The resurgence of COVID-19 cases in Japan, where Okinawa and several other prefectures are expected to be placed under pre-emergency measures, also weighed on sentiment. Some issues expanded losses as the yen rose against the dollar.

Hirohumi Yamamoto, strategist at Toyo Securities Co., said that growth names were especially vulnerable to profit-taking after U.S. interest rates rose following the release of the Fed minutes.

“Although the results of the Fed meeting were a negative surprise, the hawkish turn was not wholly unexpected,” Yamamoto said. “So a decline will not last long for blue-chip issues.”

“The fall of some issues in the Tokyo market, such as tech names, is partly a reaction to their bullish performance through late last year,” said Maki Sawada, strategist at Nomura Securities Co.

On the TSE first section, decliners overwhelmed gainers 2,012 to 138, while 35 issues were unchanged. Volume declined to 1,210 million shares from Wednesday’s 1,259 million shares.

Terumo plunged 8.96% after Mizuho Securities Co. lowered its rating for the medical equipment maker.

Growth issues succumbing to selling include M3, which was down 6.70%.

Fast Retailing sank 4.89% day after the clothing store chain released weak December retail sales data.

Airlines and railway operators were dealt a blow by the surge in COVID-19 cases. ANA fell 2.40%.

On the other hand, banking and insurance sectors benefitted from a rise in U.S. interest rates. Tokio Marine rose 1.01%, and Sumitomo Mitsui Trust grew 1.04%.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average retreated 770 points to 28,500.