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Japan stocks slump on U.S. CPI data, reports of BOJ preparing for FX intervention

Japan stocks slump on U.S. CPI data, reports of BOJ preparing for FX intervention

Reuters · 09/14/2022 02:56
Japan stocks slump on U.S. CPI data, reports of BOJ preparing for FX intervention

By Sam Byford

- Japanese stocks fell the most in three months on Wednesday, after overnight Wall Street losses on an unexpected rise in U.S. inflation data, while reports of the Bank of Japan apparently preparing for a currency intervention also weighed on sentiment.

The Nikkei share average .N225 dropped 2.95% shortly after markets opened and closed down 2.78% at 27,818, after the Nikkei reported that the BOJ conducted a rate check in apparent preparation for currency intervention amid sharp declines in yen.

The broader Topix index .TOPX closed 1.97% lower, in its worst day since June 13.

The U.S. Consumer Price Index report was a " surprise for the stock market," said Masahiro Yamaguchi of SMBC Trust Bank, who added that the Nikkei could slip back below 27,000 on future Federal Reserve interest rate hikes.

Wall Street posted its biggest loss in two years after the U.S. CPI report showed August consumer prices edged up 0.1% despite consensus expectations for a decrease.

Markets are fully pricing in a third successive rate hike of at least 75 basis points at the Fed's meeting and see a 34% probability of a highly aggressive 100 bps. FEDWATCH

Technology stocks led the losses on the Nikkei, falling 2.59%, after the Philadelphia semiconductor index .SOX slid 6.18% overnight.

SoftBank Group Corp 9984.T fell 4.38% and chipmaking equipment manufacturer Tokyo Electron 8035.T slipped 3.69%.

"The selloff in high-priced tech stocks in Japan seems to be connected [to the overnight U.S. losses]," a market participant at a domestic financial institution said.

Of the Nikkei's 225 constituents, 208 declined, 15 advanced, and two traded flat.

Some travel-related companies gained amid expectations that Japan will further ease COVID-19 visa restrictions for tourists.

Department store giant Takashimaya Co Ltd 8233.T rose 0.48%, East Japan Railway Co 9020.T gained 0.23%, and airline ANA Holdings Inc 9202.T increased 0.07%.


(Reporting by Sam Byford and Tokyo markets team; Editing by Rashmi Aich)

((Sam.Byford@thomsonreuters.com;))