Asian Shares Hit by Fears of Fed Rate Rise

Asian shares were trading broadly lower Wednesday amid heightened odds of a December rate rise by the U.S. Federal Reserve, leading to worries that foreign investors will pull money out of Asia.

"People are starting to wake up that the hike is coming," said Hao Hong, head of research at Bocom International. "The Fed is running out of excuses not to hike."

The CME Fed Fund futures showed the market's expectations of a rate increase in December rose to 74.5% from 69.5% a day earlier.

"This is the first time [in a while] the Fed Fund futures have traded above a 70% [probability] for hiking. The market is taking it for real now…the market is very concerned," said Heng Koon How, a strategist at Credit Suisse.

The market will be looking to the Federal Open Market Committee minutes set to be released later in the global day.

Japan's Nikkei Stock Average traded 0.6% lower with Korea's Kospi trading flat.

Australia's S&P/ASX 200 was down 0.4%. BHP Billiton fell 2% while Oil Search traded 2% lower. Woodside Petroleum lost 0.8% and Rio Tinto shed 1.4%. Brent, the international benchmark, was trading lower by 0.2% in Asian trade, at $52.53 a barrel.

Japanese shares were weighed down by losses in steel and financial stocks. Weak results from global aluminum major Alcoa led to declines in Japanese steelmakers, with JFE down 4.5% and Nippon Steel & Sumitomo Metal lower by 2.7%.

Among financial stocks, Mitsubishi UFJ Financial Group and Resona lost 1.6% each. Mizuho Financial Group lost 1.9%.

Hong Kong's Hang Seng Index slid 0.9% while the Shanghai Composite was trading 0.3% lower.

China fixed the yuan 0.2% weaker against the U.S. dollar Wednesday, setting the daily midpoint for the pair at 6.7258 versus 6.7098 on Tuesday. Wednesday's fix sets the yuan at the weakest level since Sept. 15, 2010, according to Thomson Reuters data, and is the third day in a row of a weaker yuan after China's weeklong holiday.

The move followed broad dollar strength in the New York session amid heightened expectations for higher U.S. rates this year.

Jenny W. Hsu and Saumya Vaishampayan contributed to this article.

Write to Willa Plank at willa.plank@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

October 11, 2016 23:25 ET (03:25 GMT)

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