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Nikkei drops as hawkish Fed bets unsettle investors

11/24/2021 | 01:42am EST

TOKYO, Nov 24 (Reuters) - Japan's Nikkei ended lower on Wednesday, as growth-oriented stocks took a beating amid investor concerns that the U.S. Federal Reserve might speed up policy tightening to cope with broadening inflationary risks.

U.S. President Joe Biden on Monday nominated Federal Reserve Chair Jerome Powell for a second four-year term and appointed Lael Brainard as vice-chair, leaving investors bracing for a more aggressive central bank.

"It's not that markets are reacting to these nominations per se. What's becoming clear is, for Powell, in his second term, the biggest task is dealing with inflation, rather than maximising employment," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Richly valued U.S. tech shares fell in the past two sessions, denting investors' risk appetite in the Japanese markets, which were closed on Tuesday for a national holiday.

The Nikkei average dropped 1.58% to 29,302.66, while the broader Topix lost 1.16% to 2,019.12, led by a 1.85% fall in Topix Growth index.

Internet firm Z Holdings, which has a price/earning ratio of more than 60 times, fell 4.6%, while medical platform operator M3 lost 5%.

Recruit Holdings shed 4.3%, while SoftBank Group , which has a big exposure to global high-tech shares, dropped 3.3%.

Semiconductor-related shares were also pounded, with Lasertec down 3.3%, Advantest losing 4.1% and Screen Holdings shedding 3.1%.

On the other hand, some value stocks gained, with a weaker yen lifting carmakers while elevated U.S. bond yields boosted banks.

Mitsubishi Motors rose 5.1%, while Nissan Motor gained 4.4%. Toyota Motor added 0.9%.

Among financials, SMFG rose 2.1%, while Mitsubishi UFJ gained 0.8%.

Resource-related firms also gained, helped by a rebound in oil prices.

Trading house Marubeni jumped 1.9% while rival Mitsui & Co added 1.7%. Sumitomo Metal gained 1.8%.

Elsewhere, Toshiba fell 1.6% following a Reuters report that its second-largest shareholder objected to the Japanese conglomerate's plan to split itself into three companies. (Reporting by Hideyuki Sano; Editing by Rashmi Aich and Sherry Jacob-Phillips)

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ADVANTEST CORPORATION -3.98% 9650 Delayed Quote.-7.80%
EURO / US DOLLAR (EUR/USD) 0.24% 1.134 Delayed Quote.-0.50%
LASERTEC CORPORATION -4.48% 26770 Delayed Quote.-20.59%
M3, INC. -2.56% 4497 Delayed Quote.-20.33%
MARUBENI CORPORATION -1.50% 1146 Delayed Quote.3.93%
MITSUBISHI MOTORS CORPORATION -3.73% 310 Delayed Quote.0.31%
MITSUBISHI UFJ FINANCIAL GROUP, INC -1.40% 674.7 Delayed Quote.9.51%
MITSUI & CO., LTD. -0.24% 2853.5 Delayed Quote.5.03%
NISSAN MOTOR CO LTD -0.95% 612.2 Delayed Quote.11.21%
PSI 20 INDEX -1.43% 5582.76 Real-time Quote.1.70%
RECRUIT HOLDINGS CO., LTD -2.07% 6019 Delayed Quote.-11.85%
SCREEN HOLDINGS CO., LTD. -5.35% 11330 Delayed Quote.-3.23%
SOFTBANK GROUP CORP. -0.72% 5487 Delayed Quote.1.71%
SUMITOMO METAL MINING CO., LTD. 3.21% 5214 Delayed Quote.16.14%
SUMITOMO MITSUI FINANCIAL GROUP, INC. -1.01% 4116 Delayed Quote.5.45%
TOPIX INDEX -0.59% 1927.18 Real-time Quote.-2.70%
TOSHIBA CORPORATION 0.66% 4864 Delayed Quote.2.16%
TOYOTA MOTOR CORPORATION -2.48% 2284.5 Delayed Quote.11.26%
Z HOLDINGS CORPORATION -0.33% 569.2 Delayed Quote.-14.43%
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