Asian markets drop as strong yen hits Japan shares

Asian markets drop as strong yen hits Japan shares

Bangkok: Asia markets mostly fell Wednesday as strength in the yen knocked Japanese shares, offsetting halfhearted enthusiasm for the US Federal Reserve’s new stimulus measures.

The Nikkei 225 stock average led the region’s losses, diving more than 2.5% as the yen crept toward a 15-year high against the dollar, hitting shares of exporters.

Asia’s weak showing came after Wall Street rallied off its lows but still closed in the red amid a limp reception for the Fed’s announcement it will use money from its mortgage securities investments to buy government debt on a small scale.

The hope is that this will send long-term rates on debt and mortgages lower, stimulating lending to consumers and business, and reinvigorating the tepid recovery in the world’s largest economy.

The US central bank also issued an assessment of the economy that was darker than a month earlier, saying the pace of the economic recovery will likely be more gradual than previously thought.

News from China was also discouraging. Industrial growth slowed further in July as Beijing clamped down on a credit boom, while inflation spiked to its highest level this year amid summer flooding that wrecked crops.

The Nikkei was off 247.45 points, or 2.6%, at 9,303.99 amid expectations the yen’s sustained weakness will eat into the profits of Japanese exporters. Sony Corp. slid 2.4% and Nissan Motor Co. tumbled 3.2%.

South Korea’s Kospi was down 0.8% at 1,766.32 and Australia’s S&P/ASX 200 fell 1.2% to 4,485.20.

Markets in India, Singapore, Taiwan, New Zealand, Malaysia and Indonesia also fell. But the Shanghai Composite Index edged up less than 0.1% to 2,595.81 after a big loss the day before and Hong Kong’s Hang Seng added 0.1% to 21,489.01.

In the US on Tuesday, the Dow Jones industrial average fell 0.5% to end at 10,644.25. That marked a fall of 54, it was down about 100 points before the Fed’s announcement. The broader Standard & Poor’s 500 index fell 6.73 points to 1,121.06.

In currencies, the dollar slipped to 85.27 yen from 85.31 yen late Tuesday in New York. The euro fell to $1.3117 from $1.3175.

Benchmark crude for September delivery was down 11 cents at $80.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.23 to settle at $80.25 on Tuesday.