Asian stocks fall as growth pessimism mounts
HONG KONG (AP) — Asian stock markets fell Wednesday after pessimism about global growth prospects sparked Wall Street's worst sell-off in three months.
Charles Plosser, president of the U.S. Federal Reserve's Philadelphia branch, told an audience that the Fed's efforts to support the world's biggest economy would likely fall short of its goals. That soured sentiment and sent Wall Street lower Tuesday.
Global stocks had risen earlier in the month as the Fed and other central banks came up with measures to boost sluggish growth. But optimism stemming from those moves has faded. Central banks had already bathed economies in massive stimulus through low interest rates and bond purchases but the world is still struggling to eke out growth, highlighting the limits of monetary policy.
Tension between China and Japan, which are the world's second and third-biggest economies, have also knocked sentiment because of the risk it will affect trade.
Japan's Nikkei 225 stock average was down 1.7 percent at 8,932.88 and Hong Kong's Hang Seng dropped 0.9 percent to 20,514.32. South Korea's Kospi shed 0.6 percent to 1,979.74 and Australia's S&P/ASX 200 fell 0.3 percent to 4,360.70. China's Shanghai Composite Index fell 0.6 percent to 2,016.61.
Investors in Hong Kong and mainland China were also staying on the sidelines ahead of major holidays next week, said Jackson Wong, a vice president at Tanrich Securities. Chinese central bank authorities often announce policy changes during holidays.
"Investors are still very cautious and I see further corrections or consolidations ahead," Wong said.
In Tokyo, shares of export-reliant companies were sold on worries about the global economy and the continued strength of the yen. Toyota shed 1.9 percent and Murata Manufacturing Co. plunged 3.1 percent.
Masahiro Yamaguchi, a vice president at Mizuho Securities Co. in Tokyo, said auto and other export issues were getting hurt because of worries about a slowdown in China, as well as the possible negative impact on exports from a simmering territorial dispute with China over tiny islands.
"It's about the China risk," he said. "The monetary policies are likely helping keep the drop in check, but they weren't enough to keep the rise going."
Political uncertainty in Japan was also adding to the cautious mood. The main opposition party is choosing a new chief later in the day. The candidates have more assertive policies than the administration in power, which could further deteriorate relations with China. The ruling party is expected to suffer a serious setback in the next parliamentary elections because of an unpopular tax increase.
On Wall Street, the Standard & Poor's 500 lost 15.30 points, its fourth straight decline, to close at 1,441.59. The 1.05 percent drop was the worst for the S&P since June 25. The Dow Jones industrial average lost 101.37 points to close at 13,457.55.
In currency trading, the dollar fell to 77.73 yen from 77.70 yen late Tuesday. The euro fell to $1.2870 from $1.2898.
Benchmark crude was down 54 cents at $90.83 in electronic trading on the New York Mercantile Exchange.
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Yuri Kageyama contributed to this report from Tokyo.
