Tokyo: Shares fall as Omicron spreads, Fed decision looms

[TOKYO] Japanese shares ended lower as cautious investors refrained from placing big bets ahead of meetings by the US Federal Reserve and other central banks, while the spread of the Omicron coronavirus variant also dented risk appetite globally.

The Nikkei closed 0.73 per cent lower at 28,432.64, while the broader Topix gave up early gains to end 0.22 per cent weaker at 1,973.81.

"Caution grew among investors as lesser time remained until they hear the outcome of the FOMC meeting, which could set a path for accelerated tapering and rate increase," said Kentaro Hayashi, senior strategist at Daiwa Securities, referring to the Federal Open Market Committee.

"Monetary tightening brings headwinds for the stock market."

The US Fed on Wednesday (Dec 15) is expected to signal a faster wind-down of asset purchases, while the European Central Bank, the Bank of England and the Bank of Japan will also meet to discuss normalising their own monetary policies.

Wider Asian equities also declined after British Prime Minister Boris Johnson warned of a "tidal wave" of new Omicron cases, and the World Health Organization said it poses a "very high" global risk.

Index heavyweights declined, with Uniqlo clothing shop owner Fast Retailing losing 2.72 per cent. Chip-related Tokyo Electron fell 1.83 per cent and air-conditioning maker Daikin Industries slipped 1.24 per cent.

Travel-related stocks took a hit after news that the fast-spreading Omicron variant accounted for around 40 per cent of infections in London and at least one death in the United Kingdom.

Airlines and railways led declines in the Japanese bourse's 33 industry sub-indices, with ANA Holdings losing 1.97 per cent, Japan Airlines falling 2.82 per cent and Central Japan Railway slipping 1.38 per cent.

The insurance sector, up 1.57 per cent, was the best performer, followed by drugmakers, which rose 0.97 per cent.

Auto and parts makers also gained, with Toyota Motor rebounding from previous session's losses with a 2.15 per cent climb and Honda Motor advancing 0.6 per cent.

REUTERS