Tokyo stocks fall on FOMC wait-and-see mood, buybacks support

Tokyo stocks experienced a decline on Tuesday as traders remained cautious in the lead-up to a Federal Reserve policy meeting, although the index saw brief gains from buybacks in previously falling stocks. The 225-issue Nikkei Stock Average closed 8.89 points, or 0.01%, lower at 63,484.10, while the broader Topix index dropped 21.05 points, or 0.52%, to 4,037.16.

Major decliners on the top-tier Prime Market included oil and coal product, bank, and securities house issues. The U.S. dollar strengthened to the 154 yen range in Tokyo, buoyed by speculation of a potential rate hike by the Federal Reserve. Stocks opened lower, mirroring overnight losses on Wall Street following remarks from top executives of U.S. AI companies, who called for a slowdown in AI development.

The West Texas Intermediate crude oil futures remained above $100 per barrel, further dampening investor sentiment. Despite the initial decline, the tech-heavy Nikkei index quickly rebounded as the market incorporated the news on AI development, while dip-buying in SoftBank Group following its previous day's drop also bolstered Tokyo stocks.

Analyst Masahiro Ichikawa of Sumitomo Mitsui DS Asset Management Co. suggested that AI-related shares would likely continue to rise as the outlook for U.S. interest rates becomes clearer, noting that the halt in development is unlikely to occur soon. Stocks faced afternoon pressure as investors remained on the sidelines, awaiting the Federal Open Market Committee meeting, and a Bank of Japan policy meeting scheduled later in the week.