Japanese Nikkei at 5-month low as US bets on rate hike, Ukrainian tensions weigh

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TOKYO — Japan’s Nikkei index hit a five-month low on Tuesday, weighed down by investor caution over the situation in Ukraine and a possible faster-than-expected U.S. rate hike ahead of the Federal Reserve’s scheduled policy meeting earlier. late in the day.

At 0213 GMT, the Nikkei share average fell 1.9% to 27,061.36, after falling 2.1% to 27,006.37, its lowest level since August 20. The broader Topix lost 2.02% to 1,891.00.

Wall Street rebounded from a strong selloff to close higher overnight as bargain hunters pushed the indices into positive territory.

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Investors are watching the U.S. Fed’s every move closely as the central bank kicks off its two-day meeting later on Tuesday, with investors beginning to speculate that there is a small possibility they will announce a surprise rate hike.

In a sign that geopolitical tensions are mounting, NATO has announced that it is putting forces on standby to prepare for a possible Russian invasion of Ukraine.

“Investors became cautious after seeing Wall Street’s sharp falls last night, and they became even more sensitive to declines in U.S. futures today,” said Shoichi Arisawa, managing director of the stock market research department. investments at IwaiCosmo Securities.

“The market will stay like this until the end of the FOMC (Federal Open Market Committee) but after tomorrow, with the start of earnings season, investors will start looking for stocks with good earnings.”

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Tech stocks dragged the Nikkei lower, with startup investor SoftBank Group losing 3.53%, chip-making equipment maker Tokyo Electron down 2.36% and air conditioner maker Daikin Industries down. down 2.58%.

All of the exchange’s 33 industrial sub-indices were trading in the red, with shippers leading the losses with a 4.57% drop.

Nihon M&A Center Holdings fell 10% after the M&A broker for small businesses delayed an earnings announcement.

Defense-related stocks advanced amid tension between Russia and NATO, with Ishikawa Seisaku jumping 6.08% and Howa Machinery 0.77%.

(Reporting by Junko Fujita, additional reporting by the Tokyo Markets Team; editing by Sherry Jacob-Phillips)