Increasing odds of a December rate increase in the U.S. is pushing Asian shares lower this week, overshadowing global central banks’ stimulus cues, which drove a rebound in the region just last month.
Individual stock benchmarks in Australia, South Korea and Hong Kong all lost more than 2% this week.
The Nikkei 225 dropped 100.56 points, or 0.5%, to 19,596.91. . The Japanese yen, which reached its weakest level since late August in recent days, is a boon for the country’s exporters.
In Hong Kong, the Hang Seng almost completely undid a 500-point-plus jump of Thursday, unloading 492.78 points, or 2.2%, to 22,396.14, amid sliding oil prices and jitters about the prospect of higher borrowing costs.
According to a recent poll of business and academic economists by The Wall Street Journal, about 92% said they expect the Fed to raise its benchmark federal-funds rate at its Dec.15-16 policy meeting, a sharp increase since immediately after the October meeting.
The renewed focus on U.S. rates is a switch from recent weeks when hopes for easing measures by central banks in Europe, Japan and China buoyed shares.
This week, falling commodities prices pressured Australia’s S&P/ASX 200 . The index has shed the bulk of its 6% bounce from late September to late October.
The benchmark is off 3.6% month-to-date, with the heft of those losses this week. Australia’s shares fell 1.5% on Friday, dragged by its energy sector, after crude oil tumbled overnight.
On Thursday, three-month copper prices hit a fresh six-year low of $4,800 U.S. per ton and gold settled at the lowest price in more than five years.
Copper last traded at $4,825.50 U.S. per ton, up from their opening price of $4,823 a ton. Gold prices were last flat at $1,081.80 an ounce from late in Asia Thursday.
A stronger U.S. dollar pushed down the Japanese yen earlier in the week to as weak as ¥123.14 to the dollar. The yen was last at ¥122.77 to one U.S. dollar, weakening by 0.2% from its late level yesterday.
An imminent move by the Fed is sidelining investors in Hong Kong, too, analysts say.
The Hang Seng Index lost 2.1% this week, while the Hang Seng China Enterprises Index was off 3.6%.
Trading volumes in Hong Kong, at a daily average of 75 billion Hong Kong dollars ($9. 68 billion U.S.), are down roughly a third from a peak of HK$292 billion in April.
Meanwhile, some analysts say that Chinese firms listed in Hong Kong have gotten increasingly attractive. They now trade near their cheapest in two months compared with their mainland counterparts.
A-shares or yuan-denominated mainland shares are roughly 40% more expensive than H-shares or Hong Kong-listed Chinese firms, compared with 21% in late October, a recent low.
The widening gap has surprised some investors, who expected a trading link between Shanghai and Hong Kong to narrow the price difference between the two markets. One year after the Stock Connect program launched, volumes have been disappointing — exacerbated by volatility on the mainland stock market.
As of Thursday, foreign investors have invested in just 40% of the maximum 300 billion yuan worth of Shanghai shares allowed for the program, down from 57% at a peak in July.
On Friday, shares of BHP Billiton Ltd., Australia’s largest mining company, were down 1.8%, after the company said it was in a dispute with the tax office in the Australian state of Queensland over coal royalty payments.
Shares of Singapore-listed Noble Group Ltd. fell 10%, after the commodities trader’s chief financial officer resigned on Thursday.
The company also said its net profit slid 84% in the third quarter, following nine months of criticism of the company’s financial reporting.
In February, a research firm Iceberg Research accused the company of irregular accounting. The firm has denied any wrongdoing. Shares are off 60% since the beginning of the year.
In other markets
The CSI 300 in Shanghai moved lower 49.08 points, or 1.3%, to 3,746.24
In Singapore, the Straits Times Index dumped 33.33 points, or 1.1%, to 2,925.68
The Kospi index in Korea fell 20.07 points, or 1%, to 1,973.29
Taiwan’s Taiex index regressed 98.59 points, or 1.2%, to 8,329.50
In New Zealand, the NZX 50 returned from holiday to shed 34.93 points, or 0.6%, and end the week at 5,989.03
The ASX 200 dropped 74.44 points, or 1.5%, to 5,051.26
