Japan's Nikkei slides 3pct as Fed hike bets, soaring oil weigh

Tokyo, Japan - The Nikkei stock index plummeted three percent on Friday, driven by growing apprehensions about potential US rate hikes and a spike in oil prices that have heightened inflation concerns. The benchmark Nikkei 225 index plummeted 3.11 percent to 63,243.98 in early trading, while the broader Topix fell 1.95 percent to 3,975.67.

US equities dipped overnight as higher Treasury yields and August producer-price data increased expectations of a Federal Reserve rate increase. Fed Chair Kevin Warsh has indicated a shift away from forward guidance, which has left investors watching for upcoming US inflation figures. Additionally, geopolitical tensions have persisted with the ongoing US-Iran conflict impacting energy markets.

Takuma Ikemoto, a market analyst at Tokai Tokyo Intelligence Lab, explained that the three major US indices also fell due to the rising crude oil prices and higher US long-term interest rates, which are likely to negatively affect Japanese equities. Fed Chair Warsh's focus on curbing inflation suggests that a cautious approach may become more prevalent in the Japanese stock market.

Among the weakest performers were Resonac Holdings, which dropped 8.12 percent, followed by Kioxia Holdings, down 7.11 percent, and Sumco, which fell 6.77 percent. On the upside, Inpex rose 2.04 percent, Konami Group increased 1.89 percent, and Bandai Namco Holdings gained 1.76 percent.