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Asia stocks cautious ahead of Fed but Japan bucks trend

Friday, 13 Sep 2013 | 3:00 AM ET

Asian equities were lower on the final trading day of the week due to profit-taking and caution ahead of the Federal Reserve's policy meeting next week but Japan bucked the trend on media reports of Lawrence Summers as the next Fed chief.

(Read more: There's no stopping September, at least not yet)

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HSI
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ASX 200
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SHANGHAI
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CNBC 100
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Fed meeting in focus

Investors in Asia took their cues from a lackluster U.S. session overnight, where stocks closed near their lows Thursday on fears the U.S. central bank may announce a tapering of its $85-billion-a-month asset-purchase program next Wednesday.

"Risk assets seem to be running out of steam heading into the weekend with a lack of fresh catalysts to keep pushing markets higher. At the same time U.S. economic data continues to suggests that tapering is indeed on track and this is resulting in a mildly cautious tone for some investors," Stan Shamu, market strategist at IG wrote in a note.

(Read more: Fed taper impact unclear, volatility certain: StanChart)

What the Holy Roman Empire & Asia have in common
Andrew Freris, Chief Investment Advisor for Asia at BNP Paribas says that Fed will not begin its tapering until Christmas, and explains what impact that will have on the Asian currencies.

Shanghai slides 0.9%

China's benchmark index retreated further from the previous session's three-month high thanks to declines in drug makers.

News that a local firm has been caught up in the nation's corruption probe, the first accusation aimed at a Chinese drug maker, spooked the sector. Shenzhen Neptunus lost 2 percent while both Guilin Layn Natural and Lukang Pharmaceutical lost 1.7 percent each.

Airlines lent some support to the index. China Eastern Air surged nearly 7 percent while Hainan Airlines rose 2 percent after Goldman Sachs analysts said that domestic airline stocks will benefit from Shanghai's free-trade zone in a research note.

Nikkei up 0.1%

Japan's benchmark index erased earlier losses to crawl back into positive territory as the yen weakened 0.3 percent against the greenback following a Nikkei report that President Obama is set to name Lawrence Summers as the next chairman of the Federal Reserve.

Sharp was the index's worst performer, lower by nearly 5 percent on news that it will issue new shares in public share offering to raise as much as $1.5 billion.

The rest of exporters were mixed camera maker Konica Minolta down 3 percent while battery maker GS Yuasa rose over 2 percent.

Reports that Prime Minister Shinzo Abe will raise the 5 percent sales tax to 8 percent from next April weighed on risk appetite. Media also reported sources as saying that Abe has ordered an economic stimulus package that could total as much as $50 billion to cushion the tax hike's impact.

Tokyo financial markets will be shut on Monday for a national holiday.

Danger of another Asian financial crisis
Bert Dohmen, President & Founder of Dohmen Capital Research Institute, warns why he is seeing some red flags in emerging markets which highlight the potential of another Asian financial crisis of the late 1990s.

Sydney down 0.4%

Australia's benchmark index hovered around 5,220 points in range-bound trade after briefly touching a five-year high in the previous session.

Gold miners were once again the session's biggest losers as spot gold headed for its worst week in two months. Medusa Mining lost 9 percent while Kinsgate Consolidated tanked over 7 percent and Perseus Mining lost 5.7 percent.

Casino operator Crown rose 1.3 percent after obtaining approval from the Sri Lankan government for a joint venture hotel and resort deal.

Kospi down 0.5%

South Korean investors tracked Asia-wide caution to fall below 2,000 points, retreating from the previous day's three-and-a-half month high.

The nation's second-largest carrier Asiana Airlines rallied 8 percent after saying it will strengthen pilot training following July's crash of one of its jets in San Francisco.

Steelmakers also weighed on the index. Blue-chip Posco fell 1.3 percent while Hyundai Steel lost over 3 percent.

India flat

India's benchmark index crawled along the flatline to hover around 19,780 points in afternoon trade while the rupee rose 0.3 percent to 63.5 per dollar.

— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC

  Price   Change %Change
NIKKEI
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ASX 200
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JPY/USD
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593
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538
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2056
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KOSPI
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6753.T
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549
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SHANGHAI
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