Stocks in China led most Asian markets lower Tuesday ahead of a decision on interest rates in the U.S., while the Nikkei Stock Average eked out a gain despite a tempered assessment of Japan’s economy by its central bank.
In Japan, the Nikkei 225 index recovered 60.78 points, or 0.3%, to 18,026.48, after the country’s central bank disappointed some investors by saying it would stand pat on its current easing program.
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In Hong Kong, the Hang Seng Index dipped 106.67 points, or 0.5%, to 21,455.23.
The region was weakening again after the Shanghai benchmark eked out gains last week for the first time since mid-August and helped lift neighboring markets. While China’s government has intervened to prop up its domestic market, a recent batch of disappointing Chinese data has spurred further selling
Analysts say investors are staying on the sidelines ahead of the U.S. Federal Reserve’s two-day meeting starting Wednesday that could end with the first rate increase in nearly a decade. Higher borrowing costs threaten firms with dollar debt, including those in Asia.
In Japan, the central bank said in a statement after a two-day policy meeting that exports and industrial production “have recently been more or less flat,” having said last month they were "picking up." It also reworded its main overall description of Japan’s economy to say it has "continued to recover moderately, although exports and production are affected by the slowdown in emerging economies."
One expert said some had bet there would be more stimulus, only to liquidate their positions after the meeting’s outcome.
Following the BOJ’s decision, the U.S. dollar briefly fell to as low as ¥119.91 from ¥120.34.
Some analysts think the central bank may take further action, possibly next month, as recent data have suggested Japan’s economy remains in a rut, shrinking 1.2% in the April-June quarter. The Nikkei is down 14% from its late-June peak.
In Australia, Tuesday’s selling came despite a party coup that brought Malcolm Turnbull to power as the fourth prime minister in just over two years. Turnbull is widely considered to be more business-friendly than his predecessor and potentially a more significant change than usual for investors.
Minutes this morning from the Reserve Bank of Australia’s latest policy meeting conveyed a neutral tone on the outlook for interest rates. The central bank lowered rates to a record low 2.0% in May to counter slowing economic growth and falling commodity prices.
Australia grew at its slowest pace in four years in the second quarter, and analysts warn the country might slide into recession for the first time in close to 25 years. Its stock market is down roughly 16% from the late April peak.
CHINA
Shares in China were also lower Tuesday, as forced liquidation pressure dented investor confidence. China’s securities regulator said late Monday it had closed more than 60% of illegal trading accounts and that the remaining accounts hold shares worth 187 billion yuan ($30 billion U.S.).
The CSI 300 in Shanghai dropped 128.90 points, or 3.9%, to 3,152.23
Recent data showed that China’s shift away from certain kinds of manufacturing has hurt global trade growth. For the third year in a row, the rate of growth in global trade is set to trail the already sluggish expansion of the world economy, according to data from the World Trade Organization and projections from leading economists.
That follows economic reports from Sunday that showed China’s factory output and fixed-asset investment fell short of expectations in August.
In other markets
In Korea, the Kospi index recouped 6.1 points, or 0.3%, to 1,937.56
In Singapore, the Straits Times Index settled 29.53 points, or 1%, to 2,841.94
In Taiwan, the Taiex index moved downward 47.30 points, or 0.6%, to 8,259.99
The NZX 50 fell 13.48 points, or 0.2%, to 5,652.39
The ASX 200 Index sank 78.03 points, or 1.5%, to 5,018.44
