(MENAFN– ecpulse)
Asian shares took a sharp dive Thursday, heading for the largest monthly slide in eight months, after the U.S. Federal Reserve pressed on with stimulus cuts and the release of a survey confirming that China`s manufacturing contracted in January added to the gloom.
Stock closed sharply lower today after getting a temporary boost Wednesday from aggressive interest rate hikes by the Turkish central bank aimed at stabilizing the lira. A move that helped calm jitters over emerging markets in general.
However, the U.S. Federal Reserve`s decision to further reduce its long-term bond purchases was a major factor in roiling Asian markets Thursday. The central bank said Wednesday that it would reduce its bond-buying program to $65 billion a month from $75 billion, citing labor-market indicators that were mixed but on balance showed improvement.
The monthly purchases have supported U.S. economic recovery by keeping interest rates low. Equities markets benefited over the past few years as the Fed and other central banks have pumped money into the global economy.
Higher rates in the U.S. and a stronger dollar will make emerging market investments far less attractive
- Japan’s Nikkei 225 closed 2.45% lower at 15.007.06
- Topix declined 2.55% to close at 1,224.09
Adding insult to injury, Chinese manufacturing contracted for the first time in six months in January, signaling a contraction in manufacturing output and adding pressures of a slowdown in Asia’s biggest economy. China`s HSBC Manufacturing Purchasing Managers` Index fell to 49.5 in January compared with 50.5 in December 2013.
- Hong Kong’s Hang Seng fell 0.48% to end session at 22,035.42
- Shanghai Composite dropped 0.82% to 2,033.08
Mirroring widespread selling, other markets in the Asia-Pacific region also tumbled on Thursday with all indices in negative territory in Indonesia, New Zealand, Hong Kong, Shanghai, and Singapore. Markets in Taiwan and South Korea were closed on the eve of the lunar New Year.
- New Zealand’s NZX 50 slumped 0.67% to close at 4,849.84
- The S&P/ASX 200 was 0.78% lower at 5,188.06
- The CSI 300 lost 1.14% to end session at 2,202.45
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