Tokyo stocks were lower Wednesday morning, as selling on concern over the impact of prolonged elevated U.S. interest rates on the world's largest economy more than offset dip-buying following sharp declines the previous day.
The 225-issue Nikkei Stock Average fell 66.75 points, or 0.17 percent, from Tuesday to 38,404.45. The broader Topix index was down 15.57 points, or 0.58 percent, at 2,681.54.
The U.S. dollar remained firm at the upper 154 yen level after hitting a new 34-year high of 154.79 yen in New York overnight, as Federal Reserve Chair Jerome Powell signaled high inflation is likely to delay the start of interest rate cuts.
At noon, the dollar fetched 154.67-70 yen compared with 154.68-78 yen in New York and 154.39-40 yen in Tokyo at 5 p.m. Tuesday.
The euro was quoted at $1.0632-0636 and 164.45-54 yen against $1.0614-0624 and 164.16-26 yen in New York, and $1.0617-0619 and 163.92-96 yen in Tokyo late Tuesday afternoon.
The stock market was initially supported by buying of battered shares after the Nikkei lost over 1,000 points in the past two trading days.
But shares soon fell into negative territory on renewed speculation that U.S. interest rate cuts may not take place as soon as June as expected earlier, analysts said.
Powell indicated Tuesday that it may take "longer than expected" to bring inflation down to the Fed's 2 percent target given the recent spate of stronger-than-expected U.S. economic data.
Diminished hopes of early rate cuts by the U.S. central bank has led to a rise in long-term interest rates in the United States and Japan, putting selling pressure on technology and other growth stocks amid higher borrowing costs.
