By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Asian stocks tumbled Tuesday, led by a 3.2% drop in Indonesia, as worries that a reduction in the Federal Reserve’s bond purchases would hurt demand for emerging market assets slammed equities in both the region’s emerging and developed nations.
Several regional currencies weakened amid worries foreign investors were withdrawing funds from the region. The Indian rupee hit a fresh record low against the U.S. currency.
The sharp declines came amid rising yields on U.S. Treasurys and as investors looked ahead to the minutes of the Federal Open Market Committee’s last policy meeting, due Wednesday, for clues on the outlook of individual members of the central bank’s rate-setting board.
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“Emerging markets are continuing to suffer from weaker sentiment in developed markets as investors are fearful that FOMC minutes later this week and the Jackson Hole meeting might result in Fed policy changes that will divert capital away from the emerging world,” said Dariusz Kowalczyk, a senior economist at Credit Agricole.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.34% ended the day 2.6% lower, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.18% lost 1.6% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.60% gave up 0.7%. Elsewhere, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.27% shed 2.2% and China’s Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.60% declined 0.6%.
Indonesia’s JSX /zigman2/quotes/210597981/delayed ID:JAKIDX -0.34% ended down 3.2%, recovering some of the day’s sharp losses. The index had plunged 5.6% on Monday.
Thailand’s SET /zigman2/quotes/210598047/delayed TH:SET +0.25% was down 2% in late trading, while India’s S&P BSE Sensex /zigman2/quotes/210597966/delayed IN:1 -0.20% traded 0.3% lower, also ahead of its close.
/zigman2/quotes/210598047/delayed SET 1,439.10, +3.54, +0.25%
/zigman2/quotes/210598065/realtime DJIA 27,655.05, -305.75, -1.09%
In currency trading, the U.S. dollar /zigman2/quotes/210562010/realtime/sampled USDINR -0.1960% climbed to a record high of 64.12 Indian rupees during the session, before coming off highs to trade around 63.57 rupees.
The day’s losses came after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.09% Monday moved lower to mark its longest losing streak of 2013. The decline came after the yield on the 10-year Treasury bond hit fresh two-year highs.
“Markets dislike uncertainty, and the U.S. [Federal Reserve’s] policy and rising yields are adding to other concerns for markets. Some guidance from the U.S. Fed would be welcomed, as its policy has not only distorted asset prices in the U.S., but all around the world,” said Perpetual head of investment market research Matthew Sherwood.
Resource-sector stocks lost ground across the region amid a rising U.S. dollar /zigman2/quotes/210598269/delayed DXY -0.38% .
In Sydney, gold producer Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM -3.58% /zigman2/quotes/203286036/delayed NCMGY -1.62% slid 2.9%, while diversified miner BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -2.05% /zigman2/quotes/208108397/composite BHP -1.13% fell 1.4%.
Elsewhere, Korea Zinc Co. /zigman2/quotes/202765860/delayed KR:010130 +0.35% fell 4.9% in Seoul, Pacific Metals Co. /zigman2/quotes/209253802/delayed JP:5541 -5.00% /zigman2/quotes/203626509/delayed PFMTF 0.00% lost 3.8% in Tokyo, and Jiangxi Copper Co. /zigman2/quotes/201668148/delayed HK:358 -0.64% /zigman2/quotes/201334192/delayed CN:600362 -2.15% /zigman2/quotes/204256025/delayed JIXAY -7.13% gave up 2.8% in Shanghai and 4.4% in Hong Kong.
Among energy producers, Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -4.63% /zigman2/quotes/206936121/delayed IPXHF +5.94% fell 3.2% in Tokyo, while PetroChina Co. /zigman2/quotes/204979431/delayed HK:857 -0.93% /zigman2/quotes/206980083/delayed CN:601857 -1.70% /zigman2/quotes/205108732/composite PTR -1.16% dropped 3.7% in Hong Kong and 1.1% in Shanghai.
Markets starting to price in end of bond buying
Take a look at Monday’s market action on Wall Street, including three stocks to watch. Photo: Getty Images.
Shares of Everbright Securities Co. /zigman2/quotes/204851344/delayed CN:601788 +0.15% plunged by the day’s 10% limit as trading in the stock resumed for the first time since Friday, when a technical glitch at the broker led to a huge buy order that resulted in massive volatility in Shanghai. The company has said it has lost 194 million yuan ($31.7 million) from the glitch.
Meanwhile, Indonesian stocks skidded further amid worries that rising U.S. Treasury yields might encourage further fund outflows from the emerging markets.
In Australia, QBE Insurance Group Ltd. /zigman2/quotes/207050271/delayed AU:QBE -1.49% /zigman2/quotes/201857553/delayed QBEIF +0.65% tumbled 5.5% after reporting a lower profit and cutting its revenue outlook.
National Australia Bank Ltd. /zigman2/quotes/210431826/delayed AU:NAB -1.14% /zigman2/quotes/208329321/delayed NABZY -0.57% rose 0.7%, however, outperforming the broader market after a drop in non-performing loans helped raise its quarterly profit.