Japan's stock market: closed at a nearly four-week low, as weakened expectations for interest rate hikes by the Bank of Japan pressured bank stocks
The Japanese stock market closed at a nearly four-week low on Wednesday, as bank stocks fell due to comments from Bank of Japan officials that lowered interest rate hike expectations. The Nikkei index dropped by 0.88%, and the Topix index fell by 1.07%. The bank index decreased by 3.19%, with Mitsubishi UFJ Financial and Sumitomo Mitsui Financial both declining by over 3%. Market expectations for interest rate hikes have weakened, and investors are focused on the upcoming U.S. non-farm payroll report
Reuters Tokyo, September 3 - The Japanese stock market closed at a nearly four-week low on Wednesday, dragged down by falling bank stocks, after comments from a senior official of the Bank of Japan lowered expectations for an early interest rate hike.
The Nikkei Index (.N225) fell 0.88% to close at 41,938.89 points; the Topix Index (.TOPX) dropped 1.07% to close at 3,048.89 points, marking the lowest closing price since August 8.
Bank of Japan Vice President Masayoshi Amamiya stated on Tuesday that the Bank of Japan should continue to raise interest rates, but warned that global economic uncertainty remains high, indicating that the central bank is not in a hurry to raise currently low borrowing costs.
"Market expectations for a rate hike by the Bank of Japan weakened after Amamiya's remarks, and he remains cautious about the impact of (U.S. President Trump’s) tariffs," said Seiichi Suzuki, chief equity analyst at Tokai Tokyo Intelligence Laboratory.
"Clearly, the buying momentum from foreign investors supporting the domestic stock market has weakened."
Optimism about the outlook for domestic companies and easing concerns over the impact of Trump’s tariffs led both the Nikkei Index and the Topix Index to reach record highs last month.
The banking index (.IBNKS.T) fell 3.19%, performing the worst among the 33 sector indices on the Tokyo Stock Exchange.
Mitsubishi UFJ Financial Group (MUFG) (8306.T) fell 3.15%, contributing the most to the decline in the Topix Index.
Sumitomo Mitsui Financial Group (SMFG) (8316.T) and Mizuho Financial Group (8411.T) both dropped over 3%.
The insurance sector (.IINSU.T) fell 2.73%.
Global investors are awaiting the U.S. non-farm payroll report scheduled for release on Friday to see if U.S. job growth in August will remain weak for the fourth consecutive month.
Chip equipment manufacturer Tokyo Electron (8035.T) fell 1.92%, while technology investor SoftBank Group (9984.T) dropped 5.27%.
Fast Retailing (9983.T), the owner of the Uniqlo brand, rose 0.5%, providing the largest support to the Nikkei Index
