Nikkei drops, risk sentiment hit by hawkish Fed tone, trade war worries

TOKYO (Reuters) – Japan’s Nikkei share average dropped on Thursday morning after the U.S.
Federal Reserve forecast a slightly faster pace of rate hikes this year, while concern about a U.S.
-China trade war also soured sentiment. FILE PHOTO: A man looks at a mobile phone next to an electronic board showing Japan’s Nikkei average outside a brokerage in Tokyo, Japan, March 23, 2018.
REUTERS/Toru HanaiThe Nikkei .N225 fell 0.
4 percent to 22,869.16 in mid-morning trade.
As expected, the Fed raised its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 percent to 2 percent, on the back of strong U.
S. economic growth.
It also dropped its longstanding pledge to stimulate the economy “for some time” and signaled it would tolerate inflation above its 2 percent target at least through 2020. Meanwhile, worries about global trade dented investors’ risk sentiment after news that U.
S. President Donald Trump will meet top trade advisers on Thursday to decide whether to activate threatened tariffs on billions of dollars in Chinese goods.
“The Fed’s hawkish tone does not help the market, which is more worried about a global trade war which would have a negative impact for a much longer term,” said Takuya Takahashi, a strategist at Daiwa Securities. He added that the market is worried about whether China retaliate by imposing tariffs on U.
S. imports such as soybeans.
Shares of exporters such as automakers and electronics stocks were sold. Nissan Motor Co (7201.
T) fell 0.7 percent, Hitachi (6501.
T) shed 1.1 percent and Panasonic Corp (6752.
T) dropped 1.5 percent.
Mining stocks underperformed after oil prices eased, hitting Inpex Corp (1605.T), which sank 2.
0 percent. Shippers bucked the weakness and soared after the Baltic Dry Index .
BADI, or freight charges, rose 1.0 percent overnight.
Mitsui OSK Lines (9104.T) surged 2.
3 percent and Kawasaki Kisen (9107.T) added 1.
5 percent. The broader Topix .
TOPX dropped 0.5 percent to 1,791.
66. .

 

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