Fed Rate Fears Sink Nikkei 2.2% as Chip Stocks Lead Slide

Japanese stocks fell sharply on Monday, with the Nikkei index dropping 2.2%, as investors reacted to a Friday speech by Federal Reserve Chair Kevin Warsh. His remarks raised the likelihood of further U.S. interest rate increases, which weighed on global markets. The decline was led by semiconductor-related shares, which are highly sensitive to interest rate expectations. Higher U.S. rates tend to strengthen the dollar and increase borrowing costs, making riskier assets like tech stocks less attractive. The Nikkei’s slide reflects growing concerns that the Fed will keep monetary policy tight for longer than previously expected. Analysts say chip makers, which rely heavily on global demand and financing, are especially vulnerable to such shifts. As of the market close, no official statements from Japanese officials or companies had been released regarding the selloff. Investors now look ahead to upcoming U.S. economic data for further clues on the Fed’s next move.