Asian stock markets sank Friday amid weak Japanese factory production figures as investors trimmed bets ahead of a U.S. economic growth report and likely Federal Reserve stimulus measures.
The Nikkei 225 stock average dropped 143.73 points, or 1.5 percent, to 9,222.30. Investor sentiment was undermined in Tokyo by a stronger yen, which hurts exporters as it cuts the value of their repatriated profits. The dollar slumped below 81 yen, nearing a post World War II record low of 79.75 yen set in 1995.
Adding to the gloom, Japan's industrial production fell for the fourth straight month in September, underscoring the country's fragile recovery. Factory output tumbled 1.9 percent from the previous month as makers of cars and electronic devices cut production, much worse than a 0.6 percent fall forecast by analysts.
South Korea's Kospi lost 1.3 percent to 1,882.90. Australia's S&P/ASX 200 was down 0.5 percent at 4,661.60.
Elsewhere, the benchmark Shanghai Composite Index fell 0.9 percent to 2,967.22 and Hong Kong's Hang Seng shed 0.7 percent to 23,042.03. Shares in India and Indonesia also declined.
In New York on Thursday, the Dow Jones industrial average declined 12.33 points, or 0.1 percent, to close at 11,113.95. Traders will be closely watching reports later Friday about U.S. gross domestic product, consumer sentiment and manufacturing.
Investors were also wrestling with uncertainty over the size and nature of the Fed's widely expected monetary easing early next week.
The U.S. central bank is expected to buy Treasury bonds, known as quantitative easing, in a bid to drive interest rates lower, encourage lending and stimulate the U.S. economy.
"The market remains fixated on the size of the quantitative easing," DBS bank said in a report.
DBS said it expects the Fed to announce initial bond purchases of between $200 billion and $300 billion while some investors are looking for a program between $500 billion and $1 trillion.
"Herein lies the fear for disappointment," DBS said.
Some analysts expect Asian policymakers will turn to capital controls to help stem a surge of cash into the region's markets that the Fed moves could trigger.
"Asia is worried about drowning in a sea of cash," HSBC said in a report. "With the Fed set to crank the pump again next week, officials are busy drawing up capital controls to fend off the tide."
The Fed will meet next week and details of any stimulus are expected to be announced when the meeting wraps up Nov. 3. U.S. mid-term elections are on Nov. 2.
In currencies, the dollar fell to 80.63 yen from 81.04 yen in New York late Thursday. The euro slipped to $1.3880 from $1.3925.
Benchmark oil for December delivery down 48 cents at $81.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 24 cents to settle at $82.18 a barrel on Thursday.
- Hong Kong s Hang Seng
- Federal Reserve
- quantitative easing
- Treasury bonds
- capital controls