By RTT News, October 23, 2013, 05:14:00 AM EDT
(RTTNews.com) - Asian stocks erased early gains to end broadly lower on Wednesday, with talk of tighter money market conditions in China and concerns about the tepid U.S. recovery weighing on sentiment. Expectations that the Federal Reserve will keep stimulus measures going for longer helped to limit the downside to some extent.
Japanese shares led regional markets lower after the dollar fell to as low as 97.86 yen in choppy trading on concerns over the strength of the U.S. economy. Data on the U.S. labor market released overnight showed that the world's largest economy was struggling even before the 16-day partial government shutdown, leaving investors worried about a slowdown in U.S. economic growth. The Nikkei average tumbled nearly 2 percent, dragged down by exporters and heavyweights amid heavy trading volumes. The broader Topix index shed 1.5 percent.
Canon, Sony, Fanuc, Fast Retailing, Honda Motor and Kyocera dropped 2-3 percent. Component supplier Murata Manufacturing declined 3.3 percent on profit taking after Apple on Tuesday unveiled a slimmer version of its top-selling full-size tablet, dubbed the "iPad Air," and a revamped iPad Mini with an improved high-definition display.
China's Shanghai Composite index dropped 1.3 percent after short-term money-market rates spiked and reports said regulators are weighing moves to tighten liquidity in a bid to curb rising housing prices and inflation. Adding to the selling pressure, the Bloomberg reported that China's biggest banks tripled the amount of bad loans written off in the first half. Hong Kong's Hang Seng retreated 1.4 percent to close at 23,000 points, its lowest level in nearly two weeks.
Australian shares snapped a six-day winning streak as higher-than-expected inflation data reduced expectations of further interest rate cuts from the central bank. The benchmark S&P/ASX 200 slipped 0.3 percent after hitting a fresh five-year high early in the session on expectations of sustained bond buying by the Federal Reserve.
Consumer prices in Australia climbed 1.2 percent in the third quarter of 2013 compared to the previous three months, the Australian Bureau of Statistics said, exceeding forecasts for an increase of 0.8 percent following the 0.4 percent gain in the second quarter. On a yearly basis, consumer prices rose 2.2 percent, raising expectations that the Reserve Bank of Australia may keep cash rates on hold in the near future.
Banks bore the brunt of the selling, with NAB pacing the declines with a 1.7 percent loss, while Commonwealth, Westpac and ANZ fell between 0.2 percent and 0.8 percent. AGL Energy dropped 1.8 percent after the company warned that a fall in energy demand due to a warmer than usual winter will reduce its underlying profit in the current financial year. BHP Billiton rose 1.2 percent, a day after upgrading its production guidance for FY14.
South Korea's Kospi average reversed early gains to end a percent lower after Chinese shares tumbled amid a jump in money-market rates. Samsung Electronics slid 0.9 percent. Electronics component maker Samsung SDI dropped 5.8 percent after sister firm Samsung Display decided to sell its LCD glass venture stake.
New Zealand shares extended gains for a third straight session, lifting the benchmark NZX-50 index up 0.9 percent to a fresh record high. Xero soared 4.4 percent to extend its recent gains, Metlifecare shares advanced 3.8 percent to a five-year high, gold miner OceanaGold rallied 4.1 percent and heavyweight Telecom added 3.5 percent. Property investor Kiwi Income Property Trust gained 2.8 percent after announcing the sale of its office complex in Auckland.
Elsewhere, India's Sensex was losing 0.9 percent, dragged down by IT stocks. Singapore's Straits Times was down 0.2 percent and the Taiwan Weighted average dropped 0.3 percent, while Indonesia's Jakarta Composite was adding 0.9 percent and Malaysia's KLSE Composite was gaining 0.6 percent.
Singapore's annual inflation weakened unexpectedly to 1.6 percent in September from a year earlier, after recording a 2 percent gain in the previous month, official data showed.
U.S. stocks posted modest gains overnight, as investors cheered solid earnings reports and bet that weak jobs data will force the Federal Reserve to hold off any reduction in its stimulus efforts until at least early next year. Investors shrugged off a report from the Commerce Department, which showed that construction spending rose by more than expected in August to reach its highest level in over four years. The Dow rose half a percent, the tech-heavy Nasdaq gained 0.2 percent and the S&P 500 added 0.6 percent to a fresh record high.
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