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 /zigman2/quotes/210597971/delayed JP:NIK +1.27% 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 /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0477% fell as low as ¥93.76 during the session, nearly two full yen lower than the ¥95.61-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 /zigman2/quotes/210598127/delayed CN:SHCOMP +1.60% 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.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +1.15% 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.
In Japan, stocks found little respite as the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0477% fell under the ¥94 level, raising more fears about the earnings outlook of companies with a significant international presence.
Shares of Fast Retailing Co. /zigman2/quotes/200663563/delayed JP:9983 +2.53% /zigman2/quotes/203924235/delayed FRCOY +2.71% skidded 8.6%, Hino Motors Ltd. /zigman2/quotes/209422954/delayed JP:7205 +1.90% /zigman2/quotes/207652388/delayed HINOY +3.31% slumped 9.9%, Hitachi Construction Machinery Co. /zigman2/quotes/205375504/delayed JP:6305 +3.64% /zigman2/quotes/202415695/delayed HTCMY +2.81% plummeted 8.6% and Advantest Corp. /zigman2/quotes/206869087/delayed JP:6857 +1.16% 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. /zigman2/quotes/208974133/delayed HK:939 +2.19% /zigman2/quotes/207732534/delayed CICHY +1.39% lost 3.2% and China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 +0.84% /zigman2/quotes/210412581/delayed CAOVF -0.67% skidded 3.5%; in Shanghai, Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 -0.87% lost 4.5%, Citic Securities Co. /zigman2/quotes/210326178/delayed CN:600030 +1.96% /zigman2/quotes/207216844/delayed CIIHF -1.48% plunged 6.4% and shares of CCB /zigman2/quotes/208058581/delayed CN:601939 +0.34% gave up 1.5%.
In Sydney, mining stocks came under pressure, with BHP Billiton Ltd. /zigman2/quotes/208108397/composite BHP +2.20% /zigman2/quotes/201448516/delayed AU:BHP +2.05% lower by 2.6%, and Fortescue Metals Group Ltd. /zigman2/quotes/202351558/delayed AU:FMG +3.87% /zigman2/quotes/204116626/delayed FSUMF +2.40% sliding 3.4%.
Rio Tinto Ltd. shares /zigman2/quotes/200083756/delayed AU:RIO +1.50% /zigman2/quotes/202627887/composite RIO +2.37% declined 2.4%. The company said it plans to sell its Eagle nickel and copper project to Lundin Mining Corp. /zigman2/quotes/201246870/delayed CA:LUN -1.30%