Japan’s Nikkei slips on caution before Fed decision; tech stocks slide

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TOKYO — Japan’s Nikkei share average retreated on Monday from a one-week high, as U.S. data showing sticky inflation raised worries that the Federal Reserve may keep interest rates higher for longer.

Tech and other so-called growth shares sagged after U.S. producer price data on Friday suggested inflation could prove more persistent than previously thought, ahead of a consumer price report on Tuesday and the Fed policy decision the following day.

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The Nikkei lost 0.29% to 27,821.12 by the midday break, after hitting its highest level since Dec. 2 on Friday.

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Uniqlo store owner Fast Retailing shaved 28 index points from the Nikkei with a 0.78% decline, making it the biggest drag.

The stock was followed by chip-making equipment makers Tokyo Electron and Advantest, which lost 1.01% and 0.91%, respectively.

Among Nikkei sectors, only financials and utilities eked out gains. Financials were buoyed by higher U.S. bond yields.

The broader Topix slipped 0.14% to 1,958.91.

“Japanese investors are worried about prolonged U.S. interest rate increases, and you can see that in the names that are leading declines,” Maki Sawada, a strategist at Nomura, said in a call with journalists.

“But investors really want to see what the FOMC (Federal Open Market Committee) will do, so I don’t expect trading leading up to that to give much indication of market direction.”

Other notable decliners on Monday included online retailer Rakuten Group, which fell 2.28%, and Nintendo, which slid 0.47%.

Among the Nikkei’s 225 components, 137 fell, 79 rose and nine were flat. (Reporting by Kevin Buckland; Editing by Subhranshu Sahu)