Nikkei 225 at Risk as Traders Bet on Fed and BoJ Rate Hikes

The Nikkei 225 Index is expected to fall further as traders bet on interest rate hikes from both the Federal Reserve and the Bank of Japan. A CNBC poll showed that over 90% of economists predict a 25-basis-point hike by the BoJ, taking rates to 1.25%, their highest level in over three decades.

The Fed is also expected to raise interest rates this week, with traders predicting a hike to between 3.75% and 4%, the highest level in a year. This would deal with elevated inflation that has remained above the 2% target for over five years.

The rising bond yields in the US and Japan are also driving investors away from the stock market, pushing debt-servicing costs higher for longer. In Japan, the ten-year yield rose to 3.03%, its highest level in decades, while in the US, it crossed the 5% milestone.

The Nikkei 225 Index is already showing bearish technicals, having moved below the 50-day Exponential Moving Average and remaining below the Supertrend indicator. The Relative Strength Index has also drifted downwards, with a symmetrical triangle forming on the chart.