Japan's Nikkei slides nearly 2% following hawkish Fed comments

Japanese shares fell nearly 2% on Monday as investors priced in further rate increases to curb inflation, according to Business Recorder. In early trading the Nikkei 225 dropped 1.97% to 65,096.63, while the broader Topix slid 0.84% to 4,111.71.

Last week US stocks closed lower after Fed Chair Kevin Warsh made clear that curbing price pressures remained the central bank's priority, boosting the chance of a further American rate hike. Markets now treat a Bank of Japan increase at its meeting next month as nearly certain, and Japanese government bond yields climbed to their highest levels in decades on Monday.

Takayuki Miyajima, a senior economist at Sony Financial Group, said in a note that expectations of US rate increases were likely to weigh on sentiment, while financial stocks could attract buyers on hopes of higher domestic rates. Among individual shares, Advantest was the biggest decliner with a 7% drop, whereas Kansai Electric Power led gainers with a 6.22% rise.