Tokyo, June 14 Japan's Nikkei share average dropped on Thursday morning after the US Federal Reserve forecast a slightly faster pace of rate hikes this year, while concern about a US-China trade war also soured sentiment. The Nikkei fell 0.4 per cent to 22,869.16 in mid-morning trade.

As expected, the Fed had raised its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 per cent to 2 per cent, on the back of strong US economic growth. It has also dropped its longstanding pledge to stimulate the economy “for some time” and signalled it would tolerate inflation above its 2 per cent target at least through 2020.

Meanwhile, worries about global trade dented investors' risk sentiment after news that US President Donald Trump will meet top trade advisers on Thursday 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.

He added that the market is worried about whether China retaliate by imposing tariffs on US imports such as soyabeans.

Shares of exporters such as automakers and electronics stocks were sold. Nissan Motor Co fell 0.7 percent, Hitachi shed 1.1 per cent and Panasonic Corp dropped 1.5 per cent. Mining stocks underperformed after oil prices eased, hitting Inpex Corp , which sank 2.0 per cent.

Shippers bucked the weakness and soared after the Baltic Dry Index, or freight charges, rose 1.0 per cent overnight. Mitsui OSK Lines surged 2.3 per cent and Kawasaki Kisen added 1.5 per cent. The broader Topix dropped 0.5 per cent to 1,791.66.

Related Topics
comment COMMENT NOW