TOKYO: Tokyo shares fell Wednesday after Wall Street took a hit on declining oil prices and a murky outlook for US interest rates.
Contradictory signals by top US monetary officials in recent days over the timing of a rate hike have caused volatility in US stocks, which have experienced moves of more than one percent for three straight sessions.
Sentiment was also hurt after petroleum producers, including US giant Chevron, plunged as the International Energy Agency warned that the global oil supply glut would last into next year, longer than expected.
The Tokyo Stock Exchange’s benchmark Nikkei 225 index followed suit, falling 0.59 percent, or 98.27 points, to 16,630.77 in the opening minutes of trading.
The Topix index of all first-section issues was down 0.65 percent, or 8.56 points, at 1,314.43.
“Investors are waking up to the fact that valuations are high and these record-low interest rates won’t be with us forever,” said Mark Lister, head of private wealth research in Wellington at Craigs Investment Partners, according to Bloomberg News.
“Markets had become dangerously reliant on central bank support and this is a bit of a wake-up call that this won’t always be the case,” he said.
Interest rates in Japan, however, are expected to go further into negative territory, according to the Nikkei business daily.
It reported that the Bank of Japan plans to make its negative interest rate policy the centrepiece of future monetary easing, promising to weigh further cuts as expansions to asset buying near their effective limit.
The plan will be included in a comprehensive assessment of BoJ monetary policy to be compiled at a two-day meeting starting Tuesday, the newspaper said.
“Overall, the news is positive for the market, but it would pressure the banking sector,” said Toshikazu Horiuchi, a broker at IwaiCosmo Securities Co, Ltd.
Horiuchi cautioned, however, that investors have to wait and see.
“The market still wants to confirm if the BoJ will really take the action,” he told AFP.
Banking giant MUFG lost 2.53 percent to 510.8 yen in early trading, while Sumitomo Mitsui Financial Group dropped 1.82 percent to 3,380 yen.
The dollar moved higher against the yen, changing hands at 102.79 in early Tokyo deals, compared with 102.59 yen in New York.
The euro, meanwhile, fetched $1.1218 and 115.13 yen compared with $1.1217 and 115.07 yen in New York.
