Asian stocks slump on Fed rate hike fears, commodity rout

Staff Writer
Columbus CEO

HONG KONG (AP) — Asian stocks slid Friday following sharp losses on Wall Street as a slump in commodities markets deterred investors from riskier assets and expectations grew that the U.S. would soon move to raise interest rates.

KEEPING SCORE: Japan's benchmark Nikkei 225 index fell 0.8 percent to 19,534.97 while South Korea's Kospi shed 0.8 percent to 1,976.88. Hong Kong's Hang Seng slumped 1.9 percent to 22,454.66 while the Shanghai Composite Index in mainland China retreated 0.5 percent to 3,614.57. Australia's S&P/ASX 200 declined 1.7 percent to 5,039.30. Benchmarks in Taiwan, Singapore, the Philippines and New Zealand also fell.

COMMODITY CRUNCH: A deepening slump in oil, metals and other commodities was putting investors off. Copper prices are down 23 percent this year while crude oil futures fell 2.7 percent on Thursday. Prices for the raw materials, which are priced in dollars, were looking less attractive as the Fed readies for a rate hike while the European and Japanese central bank look set to keep their rates low and consider rolling out more stimulus measures. Those moves would result in a stronger greenback, which in turn would make dollar-denominated contracts costlier.

FED FOCUS: A number of Federal Reserve officials, including Chair Janet Yellen and Vice Chair Stanley Fischer, gave speeches Thursday but offered little clarity on timing of an interest rate hike, a move that would end an era of stimulus policies that have boosted stocks. However, a growing number of investors are pricing in an increase at the U.S. central bank's December meeting. William Dudley, the president of the Federal Reserve Bank of New York President, said "it is quite possible" that conditions set by the Fed's policymakers under which it would begin to "normalize monetary policy could soon be satisfied."

EXPERT INSIGHT: "After the strong share market recovery through October, a pause or pullback was inevitable as U.S. shares in particular became overbought, some complacency had crept back in and as worries about a Fed driven rise in the U.S. dollar and its flow on to commodities and emerging market currencies re-emerge," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "This is now underway and looks like it will have further to go."

WALL STREET: Major U.S. benchmarks ended lower, with the Dow Jones industrial average sinking 1.4 percent to 17,448.07 and the Standard & Poor's 500 losing 1.4 percent to 2,045.97. The Nasdaq composite index fell 1.2 percent to 5,005.08.

ENERGY: Benchmark U.S. oil futures fell 21 cents to $41.54 a barrel in electronic trading on the New York Mercantile Exchange after the U.S. government said crude stockpiles grew by 4.2 million barrels last week. The contract lost $1.18, or 2.7 percent, to settle at $41.75 a barrel on Thursday. Brent crude, which is used to price international oils, was flat at $45.19 a barrel in London.

CURRENCIES: The euro inched up to $1.0787 from $1.0776 in the previous day's trading. The yen slipped to $122.66 from 122.89.