Asian Stocks Fall After Fed Suggests Sept Rate Hike Possible

31 Aug 2015 | Author: | No comments yet »

Asian Stocks Fall Again On Concerns About Fed Interest Rate Cut, Chinese Economic Data.

BEIJING (AP) — Asian stocks fell Monday after a U.S. Elsewhere, Australia said private sector credit rose 0.6%, better than expected, but business inventories in the second quarter came in flat, below a gain seen.

In the week ahead, investors will be focusing on Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike. In Tokyo the Nikkei fell by slightly more than 1 percent in morning trading, following news Japanese industrial output had fallen beyond expectations, by 0.6 percent in July.

Markets will also be watching surveys of the manufacturing and service sectors, factory orders and trade data from the world’s largest economy for fresh indications on the timing of a rate hike. Last week, U.S. stocks were mixed after the close on Friday, as gains in the Oil & Gas, Basic Materials and Technology sectors led shares higher while losses in the Healthcare, Financials and Utilities sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average lost 0.07%, while the S&P 500 index added 0.06%, and the NASDAQ Composite index climbed 0.32% as comments from a senior Federal Reserve official indicated that the central bank could still raise interest rates next month despite the recent turmoil in global markets.

The dollar found support after Fed Vice Chairman Stanley Fischer said it was still too early to determine whether to raise short-term interest rates from near zero, where they have been held since December 2008, at the bank’s September meeting. After recovering more than 10 percent Thursday and Friday — following a dramatic 18 point fall in the first half of last week — the main Shanghai Composite Index was down 2.6 percent in Monday morning trading.

The secondary index in Shenzhen also fell, by more than 2.2 percent, while the always volatile ChiNext index, for high-tech stocks, which had risen by more than 6 percent Friday, was down almost 3.1 percent. Speaking at the U.S. central bank’s annual gathering in Jackson Hole, Wyoming, Fisher emphasized he was not saying what action the Fed might take at its September meeting but analysts took his comments to mean he saw the economy moving close to satisfying the Fed’s conditions for a hike. Both Shanghai and Hong Kong are facing one of their worst monthly declines for August — at the start of Monday’s trading both were down some 12 percent on the start of the month. And at the weekend the government removed a cap on commercial banks’ loan to deposit ratios — previously set at 75 percent of deposits — to encourage lending to businesses, reduce the prevalence of shadow banking and boost the real economy.

That move followed remarks by Chinese Premier Li Keqiang, who told a meeting of China’s top leadership the Chinese yuan would remain “basically stable” following its devaluation of around 2 percent earlier in the month. Li was quoted by state media as saying there was no basis for continued depreciation of the yuan, the economy was generally sound, and China would pursue a “proactive fiscal policy and prudent monetary policy.” The official Global Times newspaper said Monday Li’s comments “should help restore investor confidence.” However, anxiety remains about latest figures on China’s factory performance due to be released Tuesday. The authorities are also reported to have closed a number of social media accounts, which they said had spread rumors about the stock market and other topics.

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