Asian markets tumble as Fed eyes end to stimulus
Hong Kong: Asian markets suffered a sell-off Thursday, following heavy losses on Wall Street, after the Federal Reserve indicated it would start easing back on its multi-billion-dollar stimulus drive this year.
But the news came with an upbeat assessment of the US economy, providing support to the dollar, which enjoyed healthy gains in New York.
Tokyo shed 1.04 percent, Hong Kong lost 1.37 percent, Sydney fell 1.24 percent, Shanghai was 0.77 percent lower and Seoul down 0.91 percent.
The Fed`s policy-making committee said Wednesday the economy continued to grow at a "moderate" pace but would maintain its USD 85-billion-a-month bond-buying programme, citing high unemployment and the negative impact of government spending cuts.
However, chairman Ben Bernanke said afterwards "the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year" if the economic outlook continues to improve.
Stressing that "our purchases are tied to what happens in the economy", he said most members of the committee foresaw tapering in the coming months.
The announcement sent US stocks tumbling -- the Dow fell 1.35 percent, the S&P 500 lost 1.39 percent and the Nasdaq tumbled 1.12 percent -- while the yield on US Treasuries jumped.
"The Fed`s result was not out of line with expectations," said SMBC Nikko Securities general manager of equities Hiroichi Nishi.
"Some transparency as to the possible end of US easing is the biggest takeaway. Players can now factor this into investment strategies. Wall Street`s fall will act as a short-term negative against the larger beneficial effect of a weaker yen."
In currency dealing, the dollar climbed in New York to end at 96.39 yen, well up from 95.05 yen earlier in the day in Asia. On Thursday in Tokyo the greenback sat at 96.66 yen.
The euro bought 128.19 yen and USD 1.3270 in Asia compared with 128.24 yen and USD 1.3297.
Global markets have been sent into turmoil in recent weeks as dealers priced in a possible end to the bond-buying, known as quantitative easing.
The programme had helped fuel a rally in equities since the Fed said in September it would provide vast sums of cash until the world`s biggest economy showed signs it was back up to strength.
Numerous data out of the United States in the past months have pointed to a healthy recovery.
While the main focus of trading Thursday will be the Fed decision, eyes will be on China, where HSBC is to release its preliminary data on manufacturing activity, with investors hoping for signs of a pick-up in the Asian economic giant.
Oil prices eased, with New York`s main contract, light sweet crude for delivery in July, down 78 cents at USD 97.46 a barrel and Brent North Sea crude for August shedding 81 cents to USD 105.31.
Gold was at USD 1,347.84 at 0225 GMT from USD 1,367.80 late Wednesday.