Nikkei drops as hawkish Fed and trade concerns curb risk appetite

Reuters

Published Jun 14, 2018 02:30AM ET

Nikkei drops as hawkish Fed and trade concerns curb risk appetite

TOKYO (Reuters) - Japan's Nikkei share average dropped on Thursday after the U.S. Federal Reserve forecast a slightly faster pace of rate hikes this year, while concerns about a U.S.-China trade war also hurt sentiment.

The Nikkei (N225) ended down 0.99 percent to 22,738.61.

As expected, the Fed raised its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 percent to 2 percent, on the back of strong U.S. economic growth. Policymakers also projected a slightly faster pace of rate increases in the coming months.

Worries about global trade also dented investors' risk sentiment. U.S. President Donald Trump is expected to meet top trade advisers to decide whether to activate threatened tariffs on billions of dollars in Chinese goods.

"The Fed's hawkish tone does not help the market, which is more worried about a global trade war, which would have a negative impact for a much longer term," said Takuya Takahashi, a strategist at Daiwa Securities.

Shares of exporters such as automakers and electronics stocks came under pressure.

Nissan Motor Co (T:7201) fell 1.3 percent, Hitachi (T:6501) shed 2.05 percent and Panasonic Corp (T:6752) dropped 1.89 percent.

Mining stocks underperformed after oil prices eased, with Inpex Corp (T:1605) losing 2.23 percent.

Shippers bucked the broader weakness and advanced after the Baltic Dry Index (BADI), or freight charges, rose overnight. Mitsui OSK Lines (T:9104) gained 1.25 percent and Nippon Yusen (T:9101) added 1.09 percent.