Stocks fell back Monday, as selling hit a wide range of issues on receding expectations for a big interest rate cut by the U.S. Federal Reserve.
The Nikkei 225 average lost 212.03 points, or 0.98 percent, to end at 21,534.35. On Friday, the key market gauge rose 43.93 points.
The Topix, which covers all first-section issues on the Tokyo Stock Exchange, closed 14.18 points, or 0.89 percent, lower at 1,578.40 after gaining 2.80 points Friday.
The market got off to a weak start after Wall Street fell Friday as speculation of a steep rate cut by the Fed receded following the release of a larger than expected U.S. nonfarm payroll rise in June, brokers said.
Selling to finance dividend payouts for exchange-traded funds linked to the Nikkei and Topix in line with their settlements Monday and Wednesday also weighed on the market, brokers said.
Both the Nikkei and Topix accelerated their downswing later in the morning and remained deep in negative territory in the afternoon, also pressured by weak performances of Shanghai and Hong Kong stocks.
Buying was kept in check as “investors took a wait-and-see stance ahead of Fed Chairman (Jerome) Powell’s congressional testimony (on Wednesday and Thursday) to gauge the Fed’s rate policy after the strong jobs report,” an official of a brokerage house said.
If Powell makes a comment tempering rate cut expectations, the Tokyo market could lose further ground, said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc.
Fuji also said the market’s downturn could prove short-lived as selling related to ETF dividends is a “temporary factor.”
Falling issues far outnumbered rising ones 1,676 to 402 in the first section, while 69 issues were unchanged.
Volume increased to 1.078 billion shares from 933 million shares Friday.
Semiconductor-related issues, including Advantest and Screen, met with selling after their U.S. peers fared poorly late last week.
Retailer Aeon plunged 4.71 percent after announcing a drop in its consolidated operating profit for March-May.
Among other major losers were technology investor SoftBank Group and automaker Suzuki.
By contrast, tire maker Bridgestone attracted purchases, snapping a four-day losing streak.
Also on the positive side were mega-bank groups Mizuho and Mitsubishi UFJ.