31.08.202600:48:58UTC+00Japanese Shares Drop on Hawkish Fed Bets

The Nikkei 225 Index fell 1.4% to below 65,500 on Monday, while the broader Topix Index declined 0.9% to 4,110, reversing the previous week’s gains. The pullback followed hawkish comments from Federal Reserve Chair Kevin Warsh, which reignited expectations of a US interest rate hike in September. In his Jackson Hole speech on Friday, Warsh cautioned that inflation is not moderating meaningfully and reaffirmed the Fed’s commitment to returning inflation to its 2% target, adding that current financial conditions are not yet restrictive.

Market sentiment was further weighed down by a surge in oil prices after the US military struck Iranian rocket launchers that were preparing to deploy mines in the Strait of Hormuz. On the domestic front, data showed an unexpected rise in Japan’s industrial production in July, while retail sales growth came in stronger than forecast.

Technology shares led the downturn, with notable losses in Advantest (-6%), Terra Drone (-15%), SoftBank Group (-3.3%), Tokyo Electron (-3%) and Ibiden Co (-3.6%).