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TOKYO (Reuters) – Japan’s Nikkei share average slid nearly 1% on Thursday, as traders took cues from an overnight tumble on Wall Street, with tech shares driving the decline.
Investors were also cautious ahead of a policy decision from the Bank of Japan later in the trading day, with most market participants expecting officials to forgo an interest rate hike this time following recent media reports from Reuters and other news outlets.
The Nikkei was trading 0.96% lower at 38,708.38 by the midday break, while the broader Topix declined 0.49%.
Heavyweight chip-sector stocks were the biggest drags on the Nikkei, with Advantest down 3.49% and Tokyo Electron losing 1.62%. Shares of artificial intelligence-focused startup investor SoftBank Group tumbled 4.32%.
Overnight, shares in U.S. chipmaker Micron Technology slumped after the company’s below-consensus profit and revenue forecast pointed to a sluggish global demand.
The tech-heavy Nasdaq dropped 3.6% on Wednesday, and the broader S&P 500 sank 2.9%.
Wall Street was broadly pressured by the Federal Reserve’s signals of a cautious pace of easing next year.
The Fed’s hawkish stance sent U.S. Treasury yields soaring, causing Japanese Government Bond yields to rise as well.
As a result, real estate was one of the worst-performing sectors on the Nikkei, while financials, despite being lower overall, were among the top performers.
Meanwhile, the market-implied odds of a BOJ hike on Thursday were virtually zero ahead of the decision, which typically comes after 0230 GMT, though the exact timing is not fixed.
“As much as the data is making the case for a December hike, reading the BOJ tea leaves, it is clear the Bank has a preference to wait a little bit longer,” said Tapas Strickland, head of market economics at National Australia Bank, who expects a quarter-point rise in January.
Shares of Nissan Motor were volatile, soaring as much as 7% but also dropping by 3.4% following a local media report that merger talks with Honda could begin on Monday. At the midday break, Nissan shares were up 3.14%, while Honda fell 2.05%.
