Nikkei Tumbles as Fed's Warsh Signals Possible Rate Hikes
The Japanese stock market took a hit on Monday as investors reacted to Federal Reserve Chair Kevin Warsh's comments that additional rate increases could be on the table to combat sticky inflation.
The Nikkei 225 index fell nearly 2% in early Tokyo trading, while the broader Topix declined by 0.84%. The selloff was led by exporters and growth stocks, which bore the brunt of selling pressure.
The divergence in market performance reflects a rotation within the market, with rate-sensitive financial shares finding support from the prospect of higher domestic borrowing costs.
Rising Japanese government bond yields also contributed to the decline, with the two-year JGB yield reaching a level not seen since April 1995. The benchmark 10-year yield climbed to 2.935%, while the 30-year yield rose to 4.135%.