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Shares in Asia slump again, Tokyo down 2.71%

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Investing.com -

Investing.com - Shares in Tokyo dropped sharply again in Asia on Wednesday on continued uncertainty about the scope for easier monetary policy to beat long-running deflation.

The Nikkei 225 slumped 2.71%, while the S&P/ASX 200 was down 1.13%. Makrte in China are shut for the Lunar New Year.

In Australia the Westpac Consumer Sentiment gauge rose to 4.2% from a drop of 3.5% in the previous month and beat expectations of a 1.0% fall.

Australia also reported that HIA New Home Sales for December jumped 6.0% month-on-month, after a fall of 2.7% in November.

In Japan, the CGPI (corporate goods price index) for January fell 0.9% month-on-month, more than the 0.7% drop seen, and on a year-on-year pace of down 3.1%.

Lower producer prices help cut costs for businesses and households but they also exert downward pressures on consumer prices and could further delay the timing of boosting inflation to 2% from around zero. The BoJ has said producer prices are expected to "continue declining for the time being, reflecting movements in international commodity prices."

U.S. stocks were unable to hold onto modest gains Tuesday on a volatile day of trading, as gains among industrial and transport stocks were offset by sharp energy losses, which pushed crude prices back near 12-year lows.

Investors were also cautious to make any major trades ahead of a highly-anticipated two-day appearance by Federal Reserve chair Janet Yellen on Capitol Hill, beginning on Wednesday morning. At Yellen's semi-annual Humphrey-Hawkins testimony, the Fed chair could provide further clarity to the gradual path the U.S. central bank will take during the early stages of its first tightening cycle in nearly a decade. On Tuesday, analysts from Goldman Sachs Group Inc (N:N:GS) estimated that the Fed will raise interest rates only three times this year, a slight cut from initial projections of four rate hikes for 2016.

The Dow Jones Industrial Average fell 12.67 or 0.08% to 16,014.38, while the NASDAQ Composite Index dropped 14.99 or 0.35% to 4,268.76, extending one of its worst four-day stretches over the last year. The Dow, which fell as much as 146 points at session-lows, has lost approximately 1,600 points since Yellen's last public appearance in mid-December. The S&P 500 Composite index, meanwhile, lost 1.23 or 0.07% to 1,852.21, as five of 10 sectors closed in the green. Stocks in the Energy and Telecommunications sectors lagged, while stocks in the Health Care and Basic Materials industries led.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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