Japan’s Nikkei experienced a decline on Friday, driven by heightened apprehensions regarding potential U.S. interest rate increases and a rise in oil prices that intensified inflation concerns. The benchmark Nikkei 225 gauge experienced a decline of 1.93%, closing at 64,011.34, which translates to a weekly decrease of 0.4%. The gauge earlier declined by as much as 3.16%. The broader Topix slipped 0.65% to 4,028.30. U.S. equities experienced a decline overnight, influenced by rising Treasury yields and the August producer-price data, which intensified expectations for a potential rate hike by the Federal Reserve.

Fed Chair Kevin Warsh has indicated a departure from forward guidance, maintaining investor vigilance regarding forthcoming inflation data. Meanwhile, geopolitical tensions persisted as the U.S.-Iran confrontation continued to disrupt energy markets. “With Fed Chair Warsh signalling ‌a focus on curbing inflation, a wait-and-see stance is likely to strengthen in the Japanese stock market,” Takuma Ikemoto said in a note.

Technology and AI-related shares led the Nikkei lower. There were 95 stocks that advanced on the gauge, contrasted with 128 that declined, and two remained unchanged. The largest losers were Resonac Holdings, down 10.68%, followed by Kioxia Holdings, 6.99% lower, and Toppan Holdings, which lost 6.95%. The largest gainers were LY, which increased by 3.44%, followed by Kawasaki Kisen Kaisha, up 2.94%, and Dai-Ichi Life Holdings, which rose by 2.73%.