By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Asian stocks sank Thursday as
uncertainty over U.S. monetary policy led to more declines on Wall
Street. Japanese shares stood out with massive losses and a move
back into bear-market territory as a further rally in the yen
thrashed exporters.
The Nikkei Stock Average plummeted 6.4% to end at 12,445.38 in
Tokyo for its sixth loss in seven trading days. The drop marked the
benchmark's decline for a seventh straight Thursday, including the
7.3% plunge on May 23.
The selloff came as the U.S. dollar (USDJPY) fell as low as
Yen93.76 during the session, nearly two full yen lower than the
Yen95.61-level seen in North America late on Wednesday. The drop
followed a third straight session of losses for U.S. stocks
Wednesday, on concerns the Federal Reserve could taper down its
bond purchases.
The dollar's tumble against the yen "will put regional markets
under pressure, but it may also [force] the U.S. Fed to reconsider
its tapering plans in the face of a global sell off," said Kim Eng
Securities director of sales trading Andrew Sullivan.
The Nikkei's 6.4% drop put it 21.9% off from its intraday peak
reached on May 23. A bear market is generally defined as a price
decline of 20% or more over at least a two-month period, though the
current fall has been in a much shorter time frame. The Nikkei
briefly entered bear-market territory last Friday.
Elsewhere in the region, Singapore's Straits Times Index lost
0.7% in afternoon trade. The index had dropped much further earlier
in the day to enter a so-called correction territory -- widely
regarded as a 10% drop from a recent peak. Stocks in some other
Southeast Asian markets suffered much bigger losses, with the
Philippine stock benchmark ending 6.8% lower, while Thailand's SET
slid 4.6% by late afternoon.
The losses Wednesday on Wall Street reinforced "the notion that
the market is similar to a junkie who needs a constant fix, which
in this case comes in the form of monetary stimulus," said CMC
Markets sales trader Miguel Audencial.
"Even a slight indication or the speculation that this stimulus
will be scaled down may ignite a sell-off," Audencial said.
Meanwhile, China's Shanghai Composite tumbled 2.8% as the
markets reopened for the first time this week after a string of
holidays, giving investors a chance to react to a string of
downbeat economic data released over the weekend, including the
monthly trade and inflation figures.
Hong Kong's Hang Seng Index skidded 2.2%, and South Korea's
Kospi lost 1.4%.
Australia's S&P/ASX 200 fell 0.6% to enter so-called
correction territory -- having dropped more than 10% from the highs
reached in May. The benchmark declined despite official figures
showing an unexpected improvement in employment trends during
May.
Stock movers
In Japan, stocks found little respite as the U.S. dollar
(USDJPY) fell under the Yen94 level, raising more fears about the
earnings outlook of companies with a significant international
presence.
Shares of Fast Retailing Co. (FRCOY) skidded 8.6%, Hino Motors
Ltd. (HINOY) slumped 9.9%, Hitachi Construction Machinery Co.
(6305.TO) plummeted 8.6% and Advantest Corp. (ATE) lost 9.4%.
"The combination of elevated risk aversion and disappointment
over recent policy announcements, in particular the lack of detail
about Prime Minister [Shinzo] Abe's 'third arrow,' has prompted
ever more upside for the [yen]" said Crédit Agricole forex strategy
chief Mitul Kotecha.
Chinese property developers and banks suffered heavy losses
during the session.
In Hong Kong, heavyweight stock China Construction Bank Corp.
(CICHY) lost 3.2% and China Overseas Land & Investment Ltd.
(0688.HK) skidded 3.5%; in Shanghai, Poly Real Estate Group Co.
lost 4.5%, Citic Securities Co. (CIIHF) plunged 6.4% and shares of
CCB gave up 1.5%.
In Sydney, mining stocks came under pressure, with BHP Billiton
Ltd. (BHP) lower by 2.6%, and Fortescue Metals Group Ltd. (FSUMY)
sliding 3.4%.
Rio Tinto Ltd. shares (RIO) declined 2.4%. The company said it
plans to sell its Eagle nickel and copper project to Lundin Mining
Corp.
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