Asia stocks down as Fed stimulus views shift again

Staff Writer
Columbus CEO

KUALA LUMPUR, Malaysia (AP) — Asian stock markets except Japan were in the red Thursday amid jitters over new signals from the U.S. Federal Reserve that it may cut monetary stimulus sooner than expected.

Hong Kong's Hang Seng shed 0.7 percent to 23,539.83 and China's Shanghai Composite lost 1.1 percent to 2,183.50. Seoul's Kospi was down 1.2 percent to 1993.20 and Australia's S&P/ASX 200 retreated 0.3 percent to 5,292.20.

Japan's Nikkei 225 bucked the trend to rise 1.3 percent to 15,278.15, boosted by a weaker yen.

Minutes from the Fed's latest policy meeting showed that the central bank would likely start tapering off its bond purchases in "coming months" if the job market improved further. Fed members also weighed the possibility of slowing the purchases even without clear evidence of a strengthening job market.

The Fed's $85 billion monthly bond purchases have kept interest rates low to spur spending and growth but also sent a wave of investment into stocks in search of higher returns.

"Together with extensive discussions on alternative policy response to keep rates low ... it indeed looks increasingly likely that the focus is now on keeping rates low after tapering, rather than delaying tapering," Credit Agricole CIB in Hong Kong said in a market commentary.

It said reduction of the bond purchases could begin as early as January, contrary to some expectations that the stimulus could stay until March at least.

The Fed's stimulus, in its various guises, has helped shore up risky assets such as stocks around the world and emerging market currencies, over the past few years as the money created has been recycled through financial markets.

On Wall Street, the Dow Jones industrial average lost 66.21 points, or 0.4 percent, to 15,900.82. It was up 20 points shortly before the minutes were released. The Standard & Poor's 500 lost 6.50 points, or 0.4 percent, to 1,781.37. The Nasdaq lost 10.28 points, or 0.3 percent, to 3,921.27.

In energy trading, benchmark U.S. crude was down 20 cents $93.65 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 1 cent to close at $93.33 on Wednesday.

The euro fell to $1.3417 from S$1.3432 late Wednesday. The dollar rose to 100.45 yen from 100.21 yen.