TOKYO, Jan 27 ― Tokyo's key Nikkei index closed down more than three per cent today after US Fed Chair Jerome Powell signalled an interest rate hike is likely in March.

The benchmark Nikkei 225 index sank 3.11 per cent, or 841.03 points, to end at 26,170.30, while the broader Topix index lost 2.61 per cent, or 49.41 points, to 1,842.44.

US stocks stumbled yesterday after Powell's speech cemented the central bank's policy pivot towards fighting inflation, setting up an end to the era of easy money that fuelled Wall Street's record-setting run during the pandemic.

In Tokyo, “risk-averse sales, especially among growth stocks, extended falls due to caution over US monetary policy,” Okasan Online Securities said in a note.

Daiwa Securities added that “falls in some earnings-related shares are contributing to a decline in the indexes”.

Market heavyweights were down, with SoftBank Group plunging 8.99 per cent to ¥4,692 (RM171.91) and Uniqlo operator Fast Retailing falling 2.63 per cent to ¥65,840.

Sony Group dropped 6.73 per cent to ¥11,770 while Tokyo Electron, which produces tools to build semiconductors, tumbled 4.83 per cent to ¥53,680.

Motor specialist Nidec lost 6.17 per cent to ¥9,580 after it announced a lower-than-expected operating profit for the third quarter to December.

Industrial robot maker Fanuc added 1.10 per cent to ¥22,410, however, after it revised up its full-year earnings forecast.

The dollar fetched ¥114.75 in Asian trade, against ¥114.64 in New York late yesterday. ― AFP