Nikkei falls amid expectations of a US rate hike and concerns about China’s recovery

Japan’s Nikkei index closed just above its lowest level in 2-1/2 months on Thursday, as worries about a stalled economic recovery in China and prospects of a US interest rate hike affected investor sentiment in Asia.

The Nikkei index fell nearly 1.5 percent to 31,309.68 points, the lowest level since early June, before paring some losses to end the session down 0.44 percent at 31,626.00 points.

The broader Topix index fell 0.34 percent to 2,253.06 points, after earlier touching a one-month low of 2,227.62 points.

Benchmark 10-year US Treasury yields reached their highest since October at 4.3120% on Thursday, amid expectations that interest rates will remain high for longer after a series of data confirmed the strength of the US economy.

Minutes of the Federal Reserve’s July meeting, released on Wednesday, also showed that officials are divided on the need to continue raising interest rates.

That pushed the yen to a nine-month low of 146.565 per dollar.

Fast Retailing, owner of the Uniqlo brand, lost 0.16 percent.

SoftBank Group shares ended the day slightly higher, while healthcare equipment maker Terumu closed 2.24 percent lower.

Tourism-related stocks fell even after the data indicated a strong recovery in tourism in Japan.

Official data showed on Wednesday that the number of visitors to Japan in July rose to its highest level since the pandemic, as a weaker yen helped boost tourism and contribute to higher growth in the world’s third-largest economy.