Japan's Nikkei sinks most in a month on Fed, China worries

TOKYO: Japan's Nikkei stock index sank to a three-week low on Thursday, as investors fretted over prospects of faster U.S. monetary tightening, the war in Ukraine and COVID-19 lockdowns in China.

The Nikkei dropped 1.69%, the most since March 11, to finish the day at 26,888.57, its lowest close since March 18.

Chipmakers led the declines, while auto companies also saw significant losses. Of the benchmark's 225 components, 188 stocks fell, 34 gained, and three closed flat.

The broader Topix fell 1.56% to 1,892.90.

"A lot of uncertainty is still swirling around external events," including the Federal Reserve and the Ukraine conflict, said a trader at a domestic securities firm.

"It's difficult for stocks to recover in such an environment."

Overnight, Wall Street slid after minutes of the Fed's March meeting showed deepening concern among policymakers that inflation had broadened through the economy, with many of them advocating bigger rate hikes.

Meanwhile, the United States imposed more sanctions on Moscow as Russian forces bombarded Ukrainian cities, while Shanghai extended a strict citywide lockdown to fight a COVID outbreak.

Chip giant Tokyo Electron slumped 5.45%, tracking a decline in U.S. peers overnight, to be both the Nikkei's biggest percentage decliner and the biggest drag by index points. Advantest slumped 5.44%.

Honda declined 4.31% after Mizuho downgraded the stock to "hold" and lowered its price target. Other automakers also retreated, with Toyota slipping 0.98% and Nissan losing 1.53%.

Uniqlo store operator Fast Retailing also stood out with a 3.36% slide, while Sony retreated 3.14%. Startup investor SoftBank Group shed 1.99%.

At the other end, healthcare stock massively outperformed, led by Astellas Pharma, which was the Nikkei's biggest percentage gainer with a 5.8% rally after Jefferies reiterated its "outperform" rating for the stock.