Japanese stocks end flat as Tesla, Fed rate-hike dread weigh

·2 min read

By Kevin Buckland

TOKYO, March 2 (Reuters) - Japan's Nikkei share average ended listless on Thursday as a disappointing Tesla investor day event and the risk of a more-hawkish U.S. Federal Reserve offset support from a weaker yen.

The Nikkei reversed early gains to end flat at 27,498.87, although the benchmark index remained around the middle of its trading range of the past five weeks.

The broader Topix slid 0.16% to 1,994.57.

Fading expectations of an imminent hawkish turn by the Bank of Japan had supported overall sentiment.

S&P 500 E-mini futures were down 0.53% and Nasdaq futures lost 0.65%.

Investors were spooked by a jump in U.S. Treasury yields to multi-month highs above 4% in Tokyo trading, as Fed officials sparred over whether high rates for longer would be enough to tame stubborn inflation, or if more aggressive tightening was needed.

But that also produced a weaker yen, which was last down about 0.35% to 136.69 per dollar.

"Generally, Japanese stocks are holding up well against a backdrop of a weaker U.S. market, partly because of the weaker yen," said Naka Matsuzawa, chief strategist at Nomura Securities.

In addition, "the market is gradually digesting that the BOJ might not be as hawkish as some people had thought initially under the new leadership," he added.

Governor Haruhiko Kuroda, who oversaw a decade of massive easing at the BOJ, will chair his final policy meeting on Thursday and Friday of next week.

The nominee to replace him, Kazuo Ueda, told parliamentary hearings that he supports the current ultra-easy policy.

Chipmaking equipment giant Tokyo Electron was the Nikkei's biggest drag, shaving off 25 points with a 1.56% slide.

At the other end, Uniqlo store operator Fast Retailing provided the most support, adding 56 points with a 2.07% advance.

(Editing by Subhranshu Sahu and Sherry Jacob-Phillips)