The Nikkei share average fell 1.7 percent to 16,672.92 points, its lowest closing level since August 26.
Advertisement
The Australian dollar was down 0.3 percent at $0.7524 AUD=D4 and the New Zealand dollar was little changed at $0.7316 NZD=D4 after losing 1 percent the previous day.
The Nikkei 225 .N225 lost 1 percent, as a selloff in JGBs sent 10-year yields to the highest since March.
The Bank of Japan, which will also meet the same week as the Fed, is now studying several options to steepen the bond yield curve, say sources familiar with its thinking, as authorities desperately seek out policy tools to revive an economy that has failed to emerge from stagnation despite years of massive stimulus.
“People are anxious as the Fed is not communicating with the market well”. Any hint of hawkishness would likely further pressure bonds and equities.
Investors are now waiting for by Fed governor Lael Brainard’s speech due later Monday which is scheduled to come just a day before the Fed goes into blackout mode before the Federal Open Market Committee meeting of September 20-21, said Sakai and other market watchers in Tokyo.
“The thinking is that if someone as dovish as she is starts talking like a hawk, people will notice”, Gittler said. “Her speech will be closely examined”. Nomura Holdings shed 2.3 percent and Daiwa Securities Group tumbled 3.0 percent as investors have become risk averse.
The yield on benchmark German debt, for instance, had turned positive for the first time since July 22 and ended at 0.02 percent, its highest since June 23.
The haven yen benefited from a drop in global equities.
The dollar was almost flat against the yen and euro during Asia trade on Monday, with the U.S. currency lacking clear direction ahead of a speech by a key member of the U.S. Federal Reserve.
The euro rose to $1.1242 against $1.1232 in NY, while it eased to 115.28 yen from 115.35 yen. The dollar index, which tracks it against a basket of six currencies, eased fractionally to 95.265.
Also raising long-term concerns, news that Democratic presidential candidate Hillary Clinton was diagnosed with pneumonia and fell ill at a September 11 memorial underscored concerns about her health less than two months before the general election.
Markets have generally assumed Clinton would win the presidency and have not truly considered the implications, both economic and for national security, should Donald Trump prevail.
Geopolitical concerns had already been inflamed by North Korea’s fifth and biggest nuclear test, ratcheting up a threat that its rivals and the United Nations have been powerless to contain. And on Monday South Korea’s Yonhap News Agency cited South Korean government sources saying North Korea has completed preparations for another test.
Advertisement
Brent crude was off 41 cents at $47.60 a barrel, while US crude lost 49 cents to $45.39.
