Tokyo: Nikkei ends at 5-month low on concerns over US rate hike, Ukraine

[TOKYO] Japan's Nikkei index fell to a 5-month low on Tuesday (Jan 25), weighed down by investor caution over the situation in Ukraine, broadening inflationary risks and on concerns of a faster-than-expected US rate hike by the Federal Reserve.

The Nikkei share average ended down 1.66 per cent at 27,131.34, the lowest close since Aug 20, after falling as much as 2.5 per cent to 26,890.94, its lowest level since Dec 29.

The broader Topix ended 1.72 per cent lower at 1,862.62, after losing as much as 2.5 per cent. The Mothers Index of startup shares fell 4.82 per cent to its lowest level since April 2020.

Technology stocks dragged the Nikkei lower, with startup investor SoftBank Group losing 5.34 per cent, chip-making equipment maker Tokyo Electron falling 2.69 per cent. Motor maker NIDEC slipped 4.44 per cent.

Wall Street bounced back from a steep sell-off to close higher overnight, with bargain hunters pushing the indexes into positive territory.

Investors are keenly watching every move of the US Fed as the central bank will begin its 2-day meeting later on Tuesday, with investors starting to speculate that there is a small possibility that they will announce a surprise rate hike.

In a sign that geopolitical tensions are heating up, Nato announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.

"Investors became cautious after seeing the steep falls on Wall Street last night, and they became even more sensitive to declines in US futures today," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

"The market will remain like this until the FOMC (Federal Open Market Committee) is over but after tomorrow, with the earnings season kicking off, investors will start hunt for stocks with good earnings." Nihon M&A Center Holdings tanked 12.2 per cent after the broker for mergers and acquisitions for small firms delayed its earnings announcement.

Defence-related Ishikawa Seisaku gave up a 12 per cent jump to slip 3.37 per cent, while Howa Machinery also reversed course to lose 0.9 per cent.

REUTERS