HONG KONG (MarketWatch) — Asia stock benchmarks fell Thursday, as a surprise rate cut in South Korea, lack of central bank policy action from Japan, and weak jobs data from Australia kept investors on edge a day before the release of a likely downbeat report on Chinese growth.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +1.88% ended down 1.5%, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.35% tumbled 2.2%, and Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO +0.47% lost 0.7%.
The day began on a weak note in Asia, after a lack of clarity on future easing measures from the Federal Reserve weighed on U.S. stocks Wednesday. Read more on the U.S. session.
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Linus Yip, strategist at First Shanghai Securities in Hong Kong said disappointment over any imminent easing by the U.S. Federal Reserve was draining confidence across the region.
”A lack of QE3 is negative for global markets,” Yip said, referring to a third round of monetary stimulus, or quantitative easing, from the Fed. He said investors were also cautious ahead of Friday’s much-anticipated Chinese second-quarter economic growth figures.
“Markets are occupied with the slowing in China. If GDP goes down to 7% or 7.2%, it won’t be a good sign. But it may also mean more action from the People’s Bank of China, and markets may jump at that,” Yip said. Read MarketWatch First Take on coming China data.
Economists surveyed by FactSet expect China to have grown 7.5% in the second-quarter from the year-ago period, markedly slower than the 8.1% expansion recorded in the first quarter.
Concerns about the region’s slowing growth were bolstered after the Bank of Korea delivered a surprise 0.25-percentage point cut to its benchmark rate, bringing it to 3%. Read more on South Korea rate cut.
The unexpected rate cut “raised concerns about intensifying downside risk to Asian growth ahead of Singapore and Chinese GDP tomorrow,” said strategists at RBC Capital Markets.
Adding to existing growth worries, official data from Australia showed the country’s seasonally-adjusted unemployment rate increased 0.1 percentage points to 5.2% in June. Read more on Australian data.
Meanwhile, the Bank of Japan left ultra-low interest rates unchanged at its policy meeting Thursday. The BOJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn’t announce any immediate increase in the overall size of the program. Read more on the BoJ meeting.
Banks sold off sharply in Hong Kong. Industrial & Commercial Bank of China Ltd. /zigman2/quotes/201401473/delayed HK:1398 +1.98% /zigman2/quotes/204265987/delayed IDCBF -6.78% /zigman2/quotes/202525815/delayed CN:601398 -0.20% lost 2.4%, and China Merchants Bank Co. /zigman2/quotes/209899244/delayed HK:3968 +4.70% /zigman2/quotes/209895294/delayed CIHHF -1.27% /zigman2/quotes/210188047/delayed CN:600036 +1.46% retreated 2.3%.