By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Most Asian markets fell Friday after the Federal Reserve’s plan to wind down bond purchases led to heavy losses on Wall Street, while Japanese stocks ended higher on the back of a weakened yen.
Mainland Chinese and Hong Kong shares pared their sharp initial declines as a sharp fall in Shanghai interbank rates from Thursday’s record highs aided banks.
The Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.49% ended 0.5% lower and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.06% fell 0.6%. Both indexes had dropped more than 2% earlier in the day, but pared losses on reports of a sharp fall in the Shanghai interbank money-market rates from the record highs they touched the previous day.
/zigman2/quotes/210598030/delayed HSI 26,341.49, -553.19, -2.06%
“With spiking rates likely an intentional move by the Chinese government, it’s probably not a sign of an emerging credit crisis, but rather responsible economic management. The main concern with China continues to be slowing economic growth,” said Rivkin Securities global analyst Tim Radford.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.79% staged a big comeback after sinking more than 2% during the morning session, finishing 1.7% higher. It was the best weekly performer among the region’s benchmarks, rising 4.3% from the previous week’s closing levels.
The broad drop in regional stocks came after the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.35% suffered its worst drop since November 2011 on Thursday, adding to the losses late Wednesday as the Fed signaled it may soon down-size bond purchases under its quantitative-easing program.
Tokyo Stock Exchange Enlarge Image
The decline extended the steep losses suffered Thursday on a combination of worries, including fears related to downbeat manufacturing data from China and a sharp spike in interbank money-market rates in Shanghai.
“In combination, these factors mean that markets are bracing for the day that they no longer have steroid injections to keep them going. Instead, fundamentals will become important to sustain gains in risk assets,” said Crédit Agricole’s Asia head of global markets research Mitul Kotecha.
The stock rebound in Tokyo came as the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1652% climbed to about ¥97.79 by the end of the Japanese stock trading session, compared with ¥97.38 in North America Thursday.
Shares of brewer Kirin Holdings Co. /zigman2/quotes/207391157/delayed JP:5406 -3.99% stumbled 4.9%, Hino Motors Ltd. /zigman2/quotes/209422954/delayed JP:7205 -3.93% /zigman2/quotes/207652388/delayed HINOY +7.76% shed 0.8%, and real-estate major Mitsui Fudosan Co. /zigman2/quotes/205394574/delayed JP:8801 -5.23% /zigman2/quotes/208297288/delayed MTSFF +4.24% gave up 2.1% to rank among the big decliners.
In Hong Kong, shares of China Construction Bank Corp. /zigman2/quotes/208974133/delayed HK:939 -0.33% rose 0.8% and Industrial & Commercial Bank of China Ltd. /zigman2/quotes/202401350/delayed IDCBY +0.40% /zigman2/quotes/201401473/delayed HK:1398 +1.03% added 1.1%, with both rebounding from early losses.
Also recovering in Shanghai trade, shares of China Merchants Bank Co. /zigman2/quotes/210188047/delayed CN:600036 -3.60% /zigman2/quotes/208876947/delayed CIHKY -6.54% rose 2.1%, and China Citic Bank Corp. /zigman2/quotes/206411273/delayed CN:601998 -4.03% /zigman2/quotes/204346887/delayed CHBJF -13.04% gained 0.3%.
The resource sector suffered further deep losses.
In Sydney, gold miner Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM -0.59% /zigman2/quotes/206026738/delayed NCMGF +0.20% fell 3.7%, Karoon Gas Australia Ltd. /zigman2/quotes/205368474/delayed AU:KAR -1.46% /zigman2/quotes/207550848/delayed KRNGF 0.00% lost 0.4%, and uranium producer Paladin Energy Ltd. /zigman2/quotes/203269866/delayed AU:PDN -3.23% /zigman2/quotes/202157125/delayed PALAF +9.33% gave up 0.5%.
In Tokyo, energy producer Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -4.42% /zigman2/quotes/206936121/delayed IPXHF -11.95% lost 2.3%, and steel maker JFE Holdings Inc. /zigman2/quotes/204336633/delayed JP:5411 -4.21% /zigman2/quotes/203557603/delayed JFEEF +21.03% sank 2.8%, and in Seoul, Korea Zinc Co. /zigman2/quotes/202765860/delayed KR:010130 -2.45% fell 3.2%.