HONG KONG (AFP) ― Asian markets mostly fell on Tuesday owing to growing concerns about a liquidity crisis in China, although Shanghai managed to claw back some ground after sinking more than five percent at one point.
The dollar also lost its upward momentum against the yen after seeing a pull-back in New York following comments from U.S. Federal Reserve officials indicating the bank would not immediately wind down its stimulus program.
Tokyo fell 0.72 percent, or 93.44 points, to 12,969.34, Seoul lost 1.02 percent, or 18.38 points, to close at 1,780.63 and Sydney slipped 0.28 percent, or 13.1 points, to 4,656.0 -- it’s lowest close in six months.
In the afternoon Shanghai was 0.60 percent lower, with bargain-hunting helping it bounce back from a second successive fall of more than five percent earlier in the day. But Hong Kong added 0.49 percent.
With no other news to influence buying, the focus was on China, where investors have been spooked by a cash crunch in the financial system that has raised fears banks will cut back on loans, which could in turn drag on the economy.
The central People’s Bank of China added to those worries on Monday when it ruled out providing any fresh money to bolster markets and ordered lenders to get their own houses in order.
Minsheng Securities analyst Zhang Lei said: “We are likely to see (China’s) stock market under more downward pressure if the central bank doesn’t make any policy stance, explicitly or implicitly. Investors are eagerly awaiting signals from the authorities.”
Wall Street provided a negative lead, with the three main indices ending well down. The Dow fell 0.94 percent, the S&P 500 tumbled 1.21 percent and the Nasdaq shed 1.09 percent.
On forex markets the dollar gave back its early gains, falling further after dipping in New York on comments from Fed officials that sought to ease concerns over its monetary easing policy.
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, released a statement and held a conference call with reporters to argue that it would continue the bond-buying until the jobless rate fell further.
And Dallas Federal Reserve chairman Richard Fisher said the central bank was not exiting its stimulus, only scaling it back.
The greenback was at 97.60 yen, against 97.74 yen in New York late Monday. The euro bought $1.3146 and 128.26 yen against $1.3124 and 128.28 yen.
Oil prices fell, with New York’s main contract, West Texas Intermediate light sweet crude for delivery in August, down 57 cents at $94.61 a barrel in afternoon trade while Brent North Sea crude for August shed 39 cents to $100.77.
Gold fetched $1,281.30 per ounce by 0640 GMT, from $1,283.99 late Monday.
In other markets:
― Taipei fell 1.22 percent, or 94.80 points, to 7,663.23.
Smartphone maker HTC rose 2.31 percent to Tw$243.5 while Hon Hai was 0.14 percent lower at Tw$70.2.
― Wellington closed down 1.08 percent, or 47.05 points, at 4,316.99.
Telecom was off 1.56 percent at NZ$2.21, Air New Zealand slipped 2.07 percent to NZ$1.42 and Fletcher Building was up 0.49 percent at NZ$8.20.
