Fears of US stimulus cut drag down Asian markets

Associated Press

KUALA LUMPUR, Malaysia (AP) — Asian stocks markets started the week on a pessimistic note, bugged by persistent fears that the U.S. may tighten its monetary policy by January.

Hong Kong's Hang Seng eased 0.1 percent to 23,220.75 and Australia's S&P/ASX 200 shed 0.3 percent to 5,395.20. Markets in Taiwan, Malaysia and Indonesia also fell. Seoul's Kospi lost 0.6 percent at 2,026.68. Japan and India's stock markets were closed Monday for public holidays.

The Federal Reserve last week said it would maintain its $85 billion monthly bond purchasing scheme but it didn't express concern, as it did in September, that higher mortgage rates could hold back hiring and economic growth. Some analysts said that suggests reduction of its stimulus, known in the markets as tapering, could begin early next year. Such worries overshadowed news of faster growth in manufacturing in the U.S. and China, the world's two largest economies, in October.

Chris Weston, chief market strategist at IG in Melbourne, Australia, said Federal Reserve official James Bullard in a speech Friday didn't rule out tapering and that any decision would be "data dependent," especially on progress in the labor market. The US is due to release its October employment report on Friday, which is likely to be weaker due to the impact of the government shutdown, he said.

"Markets have taken a dive today, although not significantly. The statement coming out from Bullard was a bit too pessimistic for market liking," he said.

The U.S. central bank's cheap money policy is aimed at supporting economic recovery and has also underpinned stock markets worldwide for several years.

Other analysts said there will be interest in a European Central Bank meeting this week because of the chance it will open the door to further policy easing following recent appreciation in the euro. Also this week, the European Commission will release its Autumn economic forecasts.

On Friday, the Dow Jones industrial average rose 69.8 points, or 0.5 percent, to 15,615.55. The Standard & Poor's 500 index rose 5.1 points, or 0.3 percent, to 1,761.64.

Benchmark U.S. crude for December delivery was down 2 cents at $94.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.77 to close $94.61 on Friday.

In currency trading, the euro fell slightly to $1.3479 from $1.3485. The dollar rose to 98.75 yen from 98.57 yen.

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