TOKYO: Tokyo stocks fell 1.05 percent Monday morning, after the Federal Reserve indicated it may go ahead with an interest rate hike in September despite concern over market turmoil in China.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange was down 200.75 points to 18,935.57 by the break, while the Topix index of all first section shares slid 0.78 percent, or 12.02 points, to 1,537.78.
“Fears that a September rate hike could lead to more stock selling will weigh negatively on stocks in both the US and Japan,” Shoji Hirakawa, chief equity strategist at Okasan Securities, told Bloomberg News.
Investors have been speculating that recent market turmoil sparked by China might push back the timing of a long-expected increase in the federal funds rate.
But Stanley Fischer, the Federal Reserve vice chair, said Friday a rate hike is still possible in September — a move that would leave few bright spots on the global economic horizon and put pressure on financial markets.
“The change in the circumstances which began with the Chinese devaluation (of the yuan) is relatively new and we are still watching how it unfolds. So I wouldn’t want to go ahead and decide right now,” he said in a CNBC interview.
US stocks were choppy on Friday, with the Dow dipping and Nasdaq advancing as fears about a global economic slowdown tested sentiment.
The Dow Jones Industrial Average shed 0.07 percent, the broad-based S&P 500 added 0.06 percent, while the Nasdaq gained 0.32 percent.
