Tokyo shares fall on risk-off trade

Tokyo stocks dropped Thursday, extending US losses, with fears growing among investors that there will be no respite from Federal Reserve rate hikes aimed at tamping down inflation.

The benchmark Nikkei 225 index fell 1.53 per cent, or 430.06 points, to 27,661.47, while the broader Topix index gave up 1.41 per cent, or 27.67 points, to 1,935.49.

“The risk-off sentiment has rapidly strengthened, pushing investors to sell to avoid further risk,” Okasan Online Securities said in a note.

Prospects for a prolonged global battle against inflation have pushed investors to forecast risks ahead.

Recession fears are hitting major economies, and US shares fell as Fed officials continued issuing hawkish comments. Cleveland Fed President Loretta Mester said Wednesday that she sees the central bank raising interest rates above four per cent by early next year.