TOKYO, April 25 (Xinhua) -- Tokyo stocks closed lower on Monday, marking its largest drop in more than six weeks, as investors' sentiment was dented by concerns over the U.S. Federal Reserve indicating more interest rate hikes could be on the way.
The 225-issue Nikkei Stock Average dropped 514.48 points, or 1.90 percent, from Friday to close the day at 26,590.78.
The broader Topix index, meanwhile, finished 28.63 points, or 1.50 percent, lower at 1,876.52.
Local brokers said the market inherited a sour mood from Wall Street after its plunge late last week following disappointing earnings and uncertainty over the Fed's next rate hike.
U.S. Federal Reserve Chair Jerome Powell has indicated near-term interest-rate hikes might be on the cards to combat rising inflation, in contrast to the Bank of Japan, which despite skyrocketing costs for energy product imports and commodities potentially being passed onto consumers amid stagnant wage growth, remains committed to its ultra-easy monetary policy.
"The U.S. markets fell too much on Friday on the rate hike comments, and the Japanese market reacted to the U.S. market too much today," Shuji Hosoi, senior strategist at Daiwa Securities, was quoted as saying.
Some strategists said that investors were aligning themselves for when the Fed might announce its next rate hike following its policy setting meeting next week.
"An array of hawkish comments from Fed officials, including from Powell, have laid down the groundwork for accelerated rate hikes ahead of its policy meeting next week," Maki Sawada, a strategist in Nomura Securities Co.'s investment content department, was quoted as saying.
Sawada also said the market here was also focused on the BOJ's upcoming two-day meeting and whether moves would be made to halt the yen's recent rapid depreciation against the U.S. dollar.
"If he (Bank of Japan Governor Haruhiko Kuroda) does not say anything about the yen's weakness, then the market would assume the central bank will allow the yen to decline further, which will cause another sharp currency move and that is negative for the stock market," Hosoi said.
By the close of play, mining, marine transportation and air transportation issues comprised those that declined the most, and issues that fell outpace those that rose by 1,554 to 250 on the Prime Market, while 34 ended the day unchanged.
Energy-oriented stocks lost ground after a fall in crude oil futures during New York trading late last week, with exploration giant Inpex losing 4.2 percent, while Japan Petroleum Exploration lost 1.3 percent.
Heavily-weighted Nikkei components dragged the broader market lower, with Fast Retailing dropping 5.3, while tech startup investor SoftBank Group tumbled 7.8 percent by the close.
Airline issues closed lower, with ANA Holdings dropping 3.4 percent, after announcing last week a bigger-than-expected loss.
On the Prime Market on Monday, 1,013.50 million shares changed hands, rising from Friday's volume of 979.40 million shares. ■