Japanese shares end lower on rate hike worries, Omicron

TOKYO: Japanese shares fell on Friday to erase most gains made in the previous session, as investors turned cautious about rate increase after the U.S. and British central banks took hawkish steps, while fears over the Omicron coronavirus variant hit travel-related stocks.

The Nikkei share average lost 1.79 per cent to close at 28,545.68, after rising more than 2 per cent on Thursday. The index edged up 0.38 per cent for the week.

The broader Topix lost 1.42 per cent to 1,984.47 but posted a 0.46 per cent gain.


"Today's decline is a natural reaction to the Fed's monetary tightening. The market jumped yesterday because those who had shorted Japanese shares bought back stocks," said Tomoichiro Kubota, senior market analyst at Matsui Securities.

"Towards the end of the year, investors will remain largely cautious about the monetary tightening."

On Wednesday, the Fed said it would accelerate a tapering of its bond-buying stimulus to end the program in March, setting up three quarter-point rate increases next year.

The Bank of England overnight also surprised markets by becoming the first major global central bank to raise interest rates.

In Japan, technology shares tracked sharp overnight losses in U.S. peers on Nasdaq, with chip-related Tokyo Electron leading Nikkei declines, losing 3.18 per cent.

Air-conditioning maker Daikin Industries fell 2.59 per cent and technology investor SoftBank Group 2.87 per cent.

Travel-related shares were hit after a report on the first case of a domestically-acquired Omicron infection.

Airlines and railways lost 1.26 per cent and 1.49 per cent, respectively. Oriental Land, the operator of the Tokyo Disney Resort, lost 4.4 per cent.