Asian markets close on three-week lows, weighed by ECB, Fed

Kazuhiro Nogi | AFP | Getty Images

Asian equities slumped to three-week lows Friday, following a global sell-off overnight as investors digested comments from the Fed and the European Central Bank (ECB).

Overnight, Fed chair Janet Yellen said in a testimony before Congress that recent economic data back the central bank's expectations of an improved job market. The U.S. non-farm payrolls number for November is due later today. Yellen added the bank will proceed with caution in raising interest rates from near zero and that Fed funds rates would remain accommodative after the initial increase.

Elsewhere, ECB president Mario Draghi announced monetary policy measures that fell short of market expectations. The central bank cut deposit rate by 10 basis points to negative 0.3 percent and said its asset purchase program will also be extended until at least March 2017 and broadened in scope.

Anatoli Annenkov, senior European economist at Societe Generale said in a note "While theories of a pushback from other Governing Council members to the Executive Board's recent dovish messages will flourish, it may simply reflect the conclusions the tasked ECB committees arrived at: that the recovery continues, that monetary policy is effective and that the new measures are judged enough."

U.S. markets saw steep losses overnight with the Dow Jones Industrial Average down 252 points or 1.42 percent at 17,478; the S&P 500 was down 30 points or 1.44 percent at 2,049. The Nasdaq was down 86 points or 1.7 percent at 5,038.

China market falls near 1.7 percent

Symbol
Name
Price
 
Change
%Change
NIKKEI
---
HSI
---
ASX 200
---
SHANGHAI
---
KOSPI
---
CNBC 100
---

The Shanghai Composite closed down 59 points or 1.66 percent at 3,525 as investors remained cautious.

Earlier, reports that China will launch circuit breakers for major stock indexes in the country starting in 2016 to stabilize the market during periods of volatility failed to lift sentiment.

Chinese finance stocks finished in the red, with brokerages seeing losses between 2.2 and 3.6 percent.

Major banks were also down between 1.2 and 4 percent, with shares in China Construction Bank down 3.9 percent.

Property stocks were also in negative territory, with the likes of Vanke, Shanghai Shi Mao, Gemdale, and Poly Real Estate seeing losses between 0.9 and 5 percent.

Overall sentiment in China's economy remain cautious. Bank of America Merill Lynch said in a recent note that data from November will continue to be mixed and suggest risks for growth. The note said, "Industrial production (IP) and fixed asset investment (FAI) growth could still be sluggish due to the lack of demand pick up amidst poor weather in the month, while retail sales growth data will likely demonstrate the relative resilience in consumption."

Already, China's Purchasing Managers Index (PMI), a measure of manufacturing activity, fell below expectations.

Japan, South Korea markets weighed by ECB decision

The sell-off contagion from overnight spread to Asia, pushing the Japanese and South Korean markets firmly in the red.

Japan's Nikkei 225 hit a three-week low, down 435 points or 2.2 percent at 19,505 and trading mostly in the red across the board.

The big news out of Japan on Friday was the announcement of a three-way merger between Toshiba, Fujitsu, and Sony's PC spin-off business Vaio.

The Nikkei reported the trio are considering an integration of their PC operations which would give them upwards of 30 percent of the Japanese marketshare, surpassing market leader NEC Lenovo Japan. It would also make them a notable global competitor.

Shares in Sony were down in morning trade by 2.4 percent, Toshiba saw losses of 1 percent, while Fujitsu was up by 2.33 percent.

In the South Korean market, the Kospi continued its losing run this week and closed 20 points or 1 percent lower at 1,974, its worst performance in over three weeks.

Blue chip shares were all firmly in the red. Shares in Samsung Electronics were down 1.63 percent, steel manufacturer Posco was down 1.16 percent while Kepco saw losses of 2 percent.

ASX closes on a three-week low

Australia's stocks closed at a three-week low on the final trading day of the week. The main ASX 200 index was down 81 points or 1.54 percent at 5,147.

Banking stocks were firmly in negative territory, down between 1.5 and 2.52 percent; shares in ANZ were down 2.52 percent.

Resources producers ended the session mixed, still weighed by global slump in commodity prices. Iron Ore miners such as Fortescue, Atlas Iron, and Mount Gibson were down between 1.2 and 5.2 percent.

Shares in Rio Tinto and BHP Billiton, two of Australia's biggest miners, were down 2.72 and 1.48 percent. Overnight both stocks saw a big sell off in the London stock market on the back of the ECB decision.

Gold stocks ended in mostly positive territory after further indication of a Fed rate hike from Yellen sent the precious metal soaring. In Asian trade, the spot gold was flat $1,061 an ounce.

Oil producers had a mixed reaction to upticks in U.S. crude and Brent prices overnight. Santos saw gains of 2.4 percent while Oil Search and Woodside Petroleum were down between 1.2 and 1.7 percent.

The Australian Bureau of Statistics also released the retail sales numbers for October, which saw 0.5 percent in turnover on-month, in line with expectations. Retail shares traded mixed with shares in Myer, an upmarket department store chain, up 2.6 percent.

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