Japan Nikkei tumbles nearly 3%

Japanese share market finished session steep lower on Wednesday, 14 September 2022, napping four-session winning streak, as market participants opted to book recent profit after a hotter than expected US inflation report solidifying the chances of aggressive rate hikes from the Federal Reserve.

Meanwhile, remarks from Japanese Finance Minister Shunichi Suzuki suggesting currency market intervention weighed on sentiment, compounded by reports that the Bank of Japan conducted a pre-intervention rate check following the yen's sharp decline.

At closing bell, the 225-issue Nikkei Stock Average index stumbled 796.01 points, or 2.78%, to 27,818.62. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 39.11 points, or 1.97%, to 1,947.46.

The Fed, which has raised benchmark borrowing costs four times this year, is due to announce its next policy decision on Sept. 21. Financial markets have fully priced in an interest rate hike of at least 75 basis points at the conclusion of the FOMC's policy meeting next week, with talk of a 100-bps lift-off are now back on the table.

Also, worries persist in the financial market that a prolonged period of policy tightening from the Fed could tip the economy over the brink of recession. The inversion of yields on two- and 10-year Treasury notes, regarded as a red flag of impending recession, widened further.

Tech stocks led losses after the Philadelphia semiconductor index fell more than 6% overnight. Advantest, Tokyo Electron and SoftBank Group Corp all fell around 4%.

Finance Minister Shunichi Suzuki suggested that direct intervention in the currency market is an option if "clearly volatile" moves persist.

Exporter-linked issues lost favor as the yen regained some ground against the U.S. dollar, with Toyota Motor reversing 1.4%, while Suzuki Motor lost 1.9%.

CURRENCY NEWS: The dollar surged to near the psychologically important 145 yen line, a 24-year high, early Wednesday after stronger-than-expected U.S. consumer price index data on Tuesday fueled expectations that the Federal Reserve will likely continue raising interest rates aggressively to tame inflation. But it retreated to the lower 143 yen level after Finance Minister Shunichi Suzuki suggested that direct intervention in the currency market is an option if "clearly volatile" moves persist.

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