Tokyo stocks close lower on interest rate worries

Tokyo stocks closed lower Wednesday as renewed worries over rate hike plans in the United States weighed on the market ahead of a meeting of central bankers this week.

The benchmark Nikkei 225 index ended down 0.49 per cent, or 139.28 points, at 28,313.47 while the broader Topix index fell 0.22 per cent, or 4.26 points, to 1,967.18.

The dollar fetched 136.66 yen, barely changed from 136.77 in New York late Tuesday. Japanese stocks started in positive territory after a four-day losing streak, but the upward drive was short-lived, with all eyes on the upcoming symposium of central bankers in Jackson Hole, Wyoming.

Investors are waiting with bated breath for US Federal Reserve Chair Jerome Powell’s speech at the meeting on Friday. He is expected to say the Fed is not yet ready to end the steep rate hikes needed to quell soaring inflation, despite some signs of progress.

“Lingering worries over US rate hike plans weighed on the market” in Tokyo, said Hiromi Kanamaru, senior strategist at Daiwa Securities.

Meanwhile, the latest US data on new home sales showed a sharp decline in July to their lowest rate since early 2016, as the real estate market continues to feel the impact of higher borrowing costs. Olympus soared 2.69 per cent to 3,088 yen after a report said Bain Capital was the frontrunner to buy its scientific optics unit for about 400 billion yen ($2.9 billion).