Nikkei Dips on Fed Fears, Hang Seng Flat on China Worries

 

Asian share indexes dropped into the red on Wednesday with many investors remaining uncertain over China’s recovery prospects and also anxious about the latest US inflation report.

The crucial US Consumer Price Index (CPI) report is expected later on Wednesday, and should shed further light on the inflation outlook and provide some clarity about whether the Federal Reserve is done tightening.

Japan’s Nikkei share average ended lower ahead of that report’s release though the losses were limited as investors bought value shares that can withstand higher rates.

 

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The Nikkei fell 0.21% to close at 32,706.52 after rising as much as 0.3% earlier in the session. The broader Topix declined 0.5% to 2,378.64.

Investors are also braced for signs the Bank of Japan (BoJ) will relax its ultra-easy policy at its two-day policy meeting next week, after Governor Kazuo Ueda signalled an early end to the bank’s negative rate in an interview with a local newspaper.

Technology startup investor Softbank Group fell 1.63% and was the biggest drag on the Nikkei.

China stocks fell too, tracking weaker Asian markets as investors waited on more clues on stimulus policies to help the world’s second-largest economy.

Chinese authorities have introduced a slew of policy measures in recent months to boost investor sentiment and revive the property sector but have so far failed to drive a sustained rally in the stock market.

The Shanghai Composite Index dropped 0.45%, or 13.99 points, to 3,123.07, while the Shenzhen Composite Index on China’s second exchange was behind 1.12%, or 21.83 points, to 1,929.45.

However, Chinese shares related to cross-strait development with Taiwan rose after China disclosed more details of its plan to make southeastern Fujian province an integrated development zone.

The Hang Seng Index lost 0.09%, or 16.67 points, to 18,009.22, while the Hang Seng China Enterprises Index declined 0.39%.

Elsewhere across the region, in earlier trade, Mumbai, Taipei and Jakarta were in the green but Sydney, Singapore, Seoul, Wellington and Manila dipped. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.3%.

 

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Europe was set to open lower, with Eurostoxx 50 futures falling 0.5%. Both S&P 500 futures and Nasdaq futures were mostly unchanged.

Oil prices extended gains on Wednesday. Brent crude futures settled 0.3 higher at $92.31 per barrel, nearing a ten-month peak that it hit a session ago, while US West Texas Intermediate crude futures were up 0.3% at $89.13.

On Wall Street, the S&P 500 fell 0.6% overnight, the Nasdaq declined 1% while Dow Jones was mostly flat.

Apple dropped 1.8% after unveiling new iPhones while not increasing prices as it faces a global smartphone glut, and Oracle shares tumbled more than 13% after the cloud-services provider forecast current-quarter revenue below targets.

The US dollar recovered some of its recent losses against the yen, up 0.2% to 147.35 yen after comments from Japan’s top central banker on a possible early exit from its negative interest rate policy sent the Japanese currency soaring.

Treasury yields climbed on Wednesday, with the two-year note touching 5.0263%, compared with a US close of 5.005%. Ten-year yields held at 4.2842%, up from the close of 4.264%.

The gold price was flat at $1,911.29 per ounce.

 

Key figures

Tokyo – Nikkei 225 < DOWN 0.21% at 32,776.37 (close)

Hong Kong – Hang Seng Index < DOWN 0.09% at 18,009.22 (close)

Shanghai – Composite < DOWN 0.45% at 3,123.07 (close)

London – FTSE 100 < DOWN 0.14% at 7,516.66 (0936 BST)

New York – Dow < DOWN 0.05% at 34,645.99 (Tuesday close)

 

• Reuters with additional editing by Sean O’Meara

 

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