Investing.com - Asian stock markets sold off sharply on Wednesday, as investors re-examined expectations on how soon the Federal Reserve may start to pull back its asset purchase program.
During late Asian trade, Hong Kong's Hang Seng Index was down 1%, Australia’s ASX/200 Index ended 1.9% lower, while Japan’s Nikkei 225 Index plunged 4%.
Official data released Tuesday showed that the U.S. trade deficit narrowed by 22.4% to a seasonally adjusted USD34.2 billion in June, the lowest level since October 2009.
Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of global equities.
Also Tuesday, Chicago Fed President Charles Evans said he expected the central bank to begin tapering its asset-purchase program by the end of the year.
In Tokyo, the Nikkei was down sharply as a stronger yen weighed on sentiment.
USD/JPY fell to hit a session low of 96.97, moving off the previous session’s high of 98.57. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.
Shares in automakers Toyota and Honda lost 2.4% and 1.6% respectively, while Sony and Sharp declined 4.3% and 2.3% apiece.
Japanese megabanks were lower, with stocks of the nation’s largest lender Mitsubishi UFJ Financial Group dropping 3.9%, while Sumitomo Mitsui Financial Group and Nomura Holdings declined 3.1% and 3.6% respectively.
Meanwhile, in Australia, the benchmark ASX/200 Index ended the session with heavy losses one day after the Reserve Bank of Australia cut its benchmark interest rate to an all-time low of 2.5%.
The big four banks traded lower, with Australia's top lender, the Commonwealth Bank of Australia shedding 2%, while Westpac Banking Group and ANZ Banking Group lost 2.2% each. National Australia Bank shares slumped 1.7%.
Miners also contributed to losses, with Newcrest Mining dropping 4.2% after gold prices fell below USD1,300 a troy ounce in New York on Tuesday.
Elsewhere, in Hong Kong, the Hang Seng declined as market players looked ahead to data scheduled for later in the week on China’s trade balance as well as a report on inflation and industrial production.
Raw material producers were under pressure, tracking commodity prices lower.
Zijin Mining Group lost 1.9%, while oil majors CNOOC and PetroChina fell 1% and 2.1% respectively.
Looking ahead, European stock market futures pointed to a mildly lower open.
The EURO STOXX 50 futures pointed to a loss of 0.2% at the open, France’s CAC 40 futures dipped 0.2%, London’s FTSE 100 futures eased down 0.1%, while Germany's DAX futures pointed to a loss of 0.2% at the open.
During late Asian trade, Hong Kong's Hang Seng Index was down 1%, Australia’s ASX/200 Index ended 1.9% lower, while Japan’s Nikkei 225 Index plunged 4%.
Official data released Tuesday showed that the U.S. trade deficit narrowed by 22.4% to a seasonally adjusted USD34.2 billion in June, the lowest level since October 2009.
Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of global equities.
Also Tuesday, Chicago Fed President Charles Evans said he expected the central bank to begin tapering its asset-purchase program by the end of the year.
In Tokyo, the Nikkei was down sharply as a stronger yen weighed on sentiment.
USD/JPY fell to hit a session low of 96.97, moving off the previous session’s high of 98.57. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.
Shares in automakers Toyota and Honda lost 2.4% and 1.6% respectively, while Sony and Sharp declined 4.3% and 2.3% apiece.
Japanese megabanks were lower, with stocks of the nation’s largest lender Mitsubishi UFJ Financial Group dropping 3.9%, while Sumitomo Mitsui Financial Group and Nomura Holdings declined 3.1% and 3.6% respectively.
Meanwhile, in Australia, the benchmark ASX/200 Index ended the session with heavy losses one day after the Reserve Bank of Australia cut its benchmark interest rate to an all-time low of 2.5%.
The big four banks traded lower, with Australia's top lender, the Commonwealth Bank of Australia shedding 2%, while Westpac Banking Group and ANZ Banking Group lost 2.2% each. National Australia Bank shares slumped 1.7%.
Miners also contributed to losses, with Newcrest Mining dropping 4.2% after gold prices fell below USD1,300 a troy ounce in New York on Tuesday.
Elsewhere, in Hong Kong, the Hang Seng declined as market players looked ahead to data scheduled for later in the week on China’s trade balance as well as a report on inflation and industrial production.
Raw material producers were under pressure, tracking commodity prices lower.
Zijin Mining Group lost 1.9%, while oil majors CNOOC and PetroChina fell 1% and 2.1% respectively.
Looking ahead, European stock market futures pointed to a mildly lower open.
The EURO STOXX 50 futures pointed to a loss of 0.2% at the open, France’s CAC 40 futures dipped 0.2%, London’s FTSE 100 futures eased down 0.1%, while Germany's DAX futures pointed to a loss of 0.2% at the open.