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Asian shares fall on US stimulus fears

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(Globalpost/GlobalPost)

Asian markets fell on Wednesday, with Tokyo leading regional declines after comments from Federal Reserve officials and fresh data stoked concerns of a potential winding down of US stimulus.

Tokyo dropped 2.14 percent as the dollar fell sharply against the yen, hitting its lowest level in more than a month.

Seoul lost 1.04 percent, Sydney was down 1.03 percent, and Hong Kong slipped 0.39 percent.

US stocks, which hit new records last week, lost ground for a second day Tuesday following indications that the Federal Reserve will begin tapering its $85 billion a month quantitative easing programme.

The Dow Jones Industrial Average lost 0.60 percent, or 93.39 points, to 15,518.74, its biggest point and percentage loss since June.

US trade numbers from the Commerce Department showed a narrowing trade deficit in June, which analysts said points to a likely upward revision to the growth estimate for the quarter, and firm growth in the current quarter.

The chiefs of the Federal Reserve's Chicago and Atlanta branches both said that the central bank could begin tapering the stimulus programme in September, but stressed that economic growth needed to hold steady or improve.

The comments could be an attempt by the Fed to prepare financial markets for a possible rollback of stimulus and ensure that valuations are not inflated, said Matthew Sherwood, head of investment market research at Perpetual Investments in Sydney.

"If they do it next month, the wind back is going to be modest," Sherwood told Dow Jones Newswires, adding that the tapering is more likely to happen in 2014.

The growing speculation also sent the dollar sharply lower against the yen.

The greenback was changing hands at 97.22 yen in early Asian trade, down from 97.76 yen in New York Tuesday afternoon.

The euro bought $1.3305, flat from New York, falling to 129.44 yen from 130.10 yen.

On oil markets New York's main contract, West Texas Intermediate for delivery in September, was up 10 cents at $105.40 a barrel in morning Asian trade, and Brent North Sea crude for September shed 18 cents to $108.00

Gold cost $1,278.10 at 0225 GMT compared with $1,293.40 late Tuesday.

In other markets:

-- Jakarta was closed for a public holiday.

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http://www.globalpost.com/dispatch/news/afp/130807/asian-shares-fall-us-stimulus-fears