Japan’s Nikkei share average edged lower on Monday, taking cues from Wall Street as investors braced for higher U.S. interest rates for longer.
However, the index entered the midday break off its morning lows as a weaker yen supported exporter shares.
The Nikkei declined 0.18% to 27,405.37, after earlier sinking as much as 0.59%. That kept it near the middle of its trading range of the past month.
Technology was among the sectors taking the biggest hit, due to their sensitivity to higher rates. Chipmaking equipment maker Tokyo Electron and startup investor SoftBank Group were the Nikkei’s biggest drag, shaving off around 28 index points each with respective 1.61% and 2.34% drops.
On the flipside, financial shares led advancers, Reuters reported.
Of the Nikkei’s 225 components, 141 rose versus 77 that fell, with seven flat.
The broader Topix edged up 0.09% to 1,990.16, after starting the day in the red.
In the near term, “it’s hard to think that there would be some development that would drive the Nikkei to regain 28,000”, said Maki Sawada, a strategist at Nomura Securities, who expects the index to stick to its recent range around 27,500 this week.
At the same time, “unless there is some news, it doesn’t seem like the market will fall dramatically from here,” she added.
Hotter than expected U.S. inflation data on Friday fuelled bets for a higher peak interest rate at the Federal Reserve. Several Fed officials are on speaking duty this week, and investors will also be watching ISM measures of manufacturing and services.
The yen was last at 136.33 per dollar, after earlier reaching the weakest level in more than two months at 136.58.
Automakers were overall firm, with Honda up 1.56% and Nissan gaining 0.85%, while Toyota was about flat.
Sony added 0.4%, although Nintendo declined 1.62% amid a downgrade by Citi.
