Asian markets were knocked back Tuesday amid spreading worries a reduction in the Federal Reserve’s bond purchases would hurt demand for emerging market assets, with Indonesian, Thai and Japanese stocks suffering big losses.
Several Asian currencies were also hit amid worries foreign investors were withdrawing funds from the region, with the Indian rupee falling to a fresh record low against the U.S. currency.
The sharp declines came amid rising yields on U.S. Treasurys and as investors looked ahead to the minutes of the Federal Open Market Committee’s last policy meeting, due Wednesday, for clues on the outlook of individual members of the central bank’s rate-setting board.
“Emerging markets are continuing to suffer from weaker sentiment in developed markets as investors are fearful that FOMC minutes later this week and the Jackson Hole meeting might result in Fed policy changes that will divert capital away from the emerging world,” said Dariusz Kowalczyk, a senior economist at Credit Agricole.
Japan’s Nikkei Stock Average ended the day 2.6% lower, South Korea’s Kospi lost 1.6% and Australia’s S&P/ASX 200 gave up 0.7%.
In afternoon trading, Hong Kong’s Hang Seng Index shed 1.7% and China’s Shanghai Composite declined 0.5%.
Elsewhere, Indonesia’s JSX slumped 4.3% to enter a so-called bear-market territory, having lost more than 20% from its 52-week high on May 21.
Thailand’s SET skidded 2.8% and India’s S&P BSE Sensex slipped 0.3%.
In currency trading, the U.S. dollar climbed to a record high of 64.12 Indian rupees during the session, before coming off highs to trade around 63.72 rupees.
The day’s losses came after the Dow Jones Industrial Average Monday moved lower to mark its longest losing streak of 2013. The decline came after the yield on the 10-year Treasury bond hit fresh two-year highs.
“Markets dislike uncertainty, and the U.S. [Federal Reserve’s] policy and rising yields are adding to other concerns for markets. Some guidance from the U.S. Fed would be welcomed, as its policy has not only distorted asset prices in the U.S., but all around the world,” said Perpetual head of investment market research Matthew Sherwood.
Stock movers
Resource-sector stocks lost ground across the region amid a rising U.S. dollar .
In Sydney, gold producer Newcrest Mining Ltd. slid 2.9%, while diversified miner BHP Billiton Ltd. fell 1.4%.
Elsewhere, Korea Zinc Co. fell 4.9% in Seoul, Pacific Metals Co. lost 3.8% in Tokyo, and Jiangxi Copper Co. gave up 3.5% in Shanghai and 4.4% in Hong Kong.
Among energy producers, Inpex Corp. fell 3.3% in Tokyo, while PetroChina Co. dropped 2.8% in Hong Kong and 0.9% in Shanghai.
Shares of Everbright Securities Co. plunged by the day’s 10% limit as trading in the stock resumed for the first time since Friday, when a technical glitch at the broker led to a huge buy order that resulted in massive volatility in Shanghai. The company has said it has lost 194 million yuan ($31.7 million) from the glitch.
Meanwhile, Indonesian stocks skidded further amid worries that rising U.S. Treasury yields might encourage further fund outflows from the emerging markets.
In Jakarta trade, PT Bank Rakyat Indonesia slid 5.6%, and PT Bumi Resources tumbled 8.1%.
In Australia, QBE Insurance Group Ltd. tumbled 5.5% after reporting a lower profit and cutting its revenue outlook.
Coca-Cola Amatil Ltd. also retreated 5.5% after a price war cut into its first-half profit.
National Australia Bank Ltd. rose 0.7%, however, outperforming the broader market after a drop in non-performing loans helped raise its quarterly profit.
Source : Marketwatch
