Japan's Nikkei 225 Average and oil prices hit six-week lows Wednesday as investors pulled funds out of bets on the global economy's recovery and favored safe havens, such as the U.S. dollar and government bonds.
Comments that a second U.S. stimulus package may be necessarycoupled with heavy U.S. job losses have taken the wind out of a rally in global stocks and commodities, tempering some of the optimism about how quickly growth will return. Data showed U.S. consumers defaulting on credit card bills and home loans at a record rate as unemployment grows.
The yen pushed higher as investors reversed positions in higher-yielding currencies, which tend to benefit from rising stocks and commodities. The low-yielding yen is often used as a cheap source of funds to buy higher-yielding currencies in carry trades. The dollar dipped 0.2 percent to 94.60 yen and touched a five-week low of 94.52 yen. The euro shed 0.3 percent to 131.50 yen and struck a six-week low. Oil prices approached the $62 a barrel level and have shed more than $11 in a little more than a week. Gold was little changed at $923.35 an ounce.
Japanese core machinery orders surprisingly fell 3.0 percentfrom a month earlier in May, in government data released just before the Nikkei's open, adding to concerns that business investment may fall further as companies look to cut capital expenditure.
The Nikkei 225 Average fell 2.4 percent to a six-week closing low, hurt by an unexpected slide in domestic machinery orders and as the yen rose to seven-week highs against the dollar on talk of more stimulus for the U.S. economy. Komatsu and other machinery makers dropped after Japan's core private-sector machinery orders fell 3.0 percent in May from the previous month, suggesting a recovery in capital spending may be delayed..
South Korea's KOSPI ended just 0.2 percent lower, trimming early losses from concerns over the global economy, helped by gains in carmakers and with technology heavyweights such as Samsung regaining ground.
Australian shares closed flat, clawing back from earlier losses as investors looked to buy some stocks at cheaper levels, including miner Rio Tinto and the top banks.
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Hong Kong shares tumbled 0.8 percent, set for a third straight losing session, as talk swirled of the need for a second round of stimulus spending in the United States, fueling investor doubts about the pace of economic recovery. China Construction Bank fell 0.4 percent. China Merchants Bank slipped 3.6 percent. China's sixth-largest lender is planning a rights share offer to raise about $3 billion before year-end, as it seeks to boost its capital after overpaying for a recent acquisition, investment banking sources told Reuters.
Singapore's Straits Times Index dropped 0.6 percent, also pulled lower by concerns over the U.S. economy.
China's Shanghai Composite Index pared back losses, but was still down 0.3 percent. Chinese bank stocks led the pullback as investors worried that China may backtrack on its easy monetary policies following a strong surge in new lending in the first half. The property sector was also weak.