Tokyo stocks opened lower Monday as the yen strengthened against the dollar, following rallies on Wall Street where investors speculated that the Fed may slow its rate hikes.
The benchmark Nikkei 225 index was down 1.14 percent, or 297.98 points, at 25,821.54 in early trade, while the broader Topix index lost 0.62 percent, or 11.89 points, to 1,891.19.
The dollar fetched 128.04 yen in early Asian trade, against 127.87 yen Friday in New York where the yen firmed from 129.11 in Asian trade earlier in the day.
A higher yen is generally a negative factor for Japanese exporters.
“Japanese shares are seen starting with losses, with investors disheartened by the strong yen,” said senior market analyst Toshiyuki Kanayama of Monex.
On Friday, Wall Street stocks finished a strong week on another positive note, shaking off early weakness and pushing higher amid a turnaround in banking shares.
The reversal was partly thanks to a surprisingly strong consumer sentiment report from the University of Michigan, analysts said.
“The US market last weekend was supported by speculation that the pace of rate hikes (by the US Federal Reserve) will slow” following the data, Kanayama said.
“A combination of upward pressure on Japanese yields and a paring of US rate hike expectations has seen some reversal of earlier depreciation pressure for the yen as rate differentials with the US widened,” said National Australia Bank economist Taylor Nugent.
Automakers were among the losers in Tokyo, with Honda dropping 1.76 percent to 3,013 yen, Nissan trading down 1.88 percent at 411.5 yen, and Toyota down 0.91 percent at 1,799 yen.
Banks were also lower, with Mitsubishi UFJ Financial down 1.07 percent at 966.6 yen and Sumitomo Mitsui Financial down 1.26 percent at 5,648 yen.
Sony Group was trading up 0.46 percent at 11,015 yen, however, and Panasonic rose 0.41 percent to 1,107.5 yen.
