As expectations of further US rate hikes spread, risk-averse selling dominated Japanese stocks, which fell sharply. Interest-rate expectations are likely to fluctuate depending on US economic and inflation data, putting a lid on stock prices.
The Tokyo market saw a stronger risk-off move against the backdrop of expectations of further US rate hikes, and the Nikkei 225 fell sharply. Concerns over higher interest rates spread, prompting broad-based selling.
US PCE inflation was 3.7% and core PCE inflation was 3.3%, both unchanged, with signs of slowing inflation remaining difficult to discern. This has increased the risk of fluctuations in interest-rate expectations, and some market participants believe that high-PER stocks and growth stocks in Japan may become more volatile.
Market participants point out that the performance of stocks highly sensitive to interest rates may continue to be influenced by the results of US economic indicators.