Japan’s Nikkei Falls Ahead of Fed Decision

Japanese technology stocks on the Nikkei index showed signs of being weighed down by concerns over the US Fed’s hawkishness around interest rate hikes.

US tech stocks started the trend early in the week’s trading by suffering strong losses that were only offset by modest gains. Now, Japanese tech stocks are following suit.

The Nikkei share average closed midweek trading 0.44% down, at 27,011.33, after touching a 13-month low earlier in the session. 

The Fed is gearing up to flesh out its policy aims and is expected for the first time to quantify expected rate increases and the dates on which they will come into force.

Japanese technology stocks were at the forefront of the Nikkei’s jitters. Electronics company Tokyo Electron lost 0.81%, robot maker Fanuc fell 3.29%, and phone operator KDDI plunged 2.57%. 

What does this mean for me?

Technology stocks, like high-growth stocks, tend to do well when money is cheap and interest rates are low. Analyst sentiment darkens when the cost of money rises, causing a negative outlook in which tech stocks do not thrive. 

This information is useful to you as a stock trader. As we head into a year during which many central banks will raise interest rates, watch out for the performance of the tech stocks in your portfolio.

It could be that the inverse relationship between interest rates and tech-related bullishness could find a way into your strategic planning.