Japanese stocks tumble on US CPI data as BOJ reports brace for FX intervention

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

The Nikkei stock average fell 2.95% shortly after markets opened and closed 2.78% at 27,818, after the Nikkei newspaper reported that the BOJ had carried out a stock check. rates in apparent preparation for monetary intervention amid sharp declines in the yen.

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

The U.S. Consumer Price Index report was a “negative surprise for the stock market”, said SMBC Trust Bank’s Masahiro Yamaguchi, who added that the Nikkei could drop back below 27,000 on future rises. Federal Reserve interest rates.

Wall Street posted its biggest loss in two years after the US CPI report showed August consumer prices edged up 0.1% despite consensus expectations of a decline.

Markets are now fully pricing in a third straight rate hike of at least 75 basis points at the next Fed meeting and are pricing in a 34% chance of a very aggressive 100 basis point hike.

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

SoftBank Group Corp fell 4.38% and chip-making equipment maker Tokyo Electron fell 3.69%.

“The sell-off in high-priced tech stocks in Japan appears to be linked [to the overnight U.S. losses]“said a market participant from a domestic financial institution.

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

Some travel-related businesses have made progress amid expectations that Japan will further ease COVID-19 visa restrictions for tourists.

Department store giant Takashimaya Co Ltd rose 0.48%, East Japan Railway Co gained 0.23% and airline ANA Holdings Inc rose 0.07%. (Reporting by Sam Byford and the Tokyo Markets Team; Editing by Rashmi Aich)

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