Asian markets down on lingering Fed fears

A woman walks past an electronic prices board in Tokyo. Asian markets fell on Tuesday following another weak lead
from Wall Street. (AFP/Toru Yamanaka)

HONG KONG: Asian markets fell on Tuesday following another weak lead from Wall Street, while attention returns to the US Federal Reserve's stimulus programme as it prepares to release minutes of its latest policy meeting.

Emerging markets took a beating on expectations the Fed's quantitative easing will start to dry up. Their currencies also suffered heavy selling, with the Indian rupee hitting another record low against the dollar.

Jakarta ended down 3.21 percent, or 138.53 points, at 4,174.98, extending a 5.58 percent drop on Monday.

Tokyo tumbled 2.63 percent, or 361.75 points, to 13,396.38 as the dollar gave up earlier gains against the yen. Sydney slipped 0.67 percent, or 34.3 points, to 5,078.2 and Seoul lost 1.55 percent, or 29.79 points, to 1,887.85.

Hong Kong fell 2.20 percent, or 493.41 points to 21,970.29 and Shanghai was off 0.62 percent, or 13.01 points, at 2,072.59.

Manila's market was closed for a second straight day as the Philippine capital was hit by floods.

Global markets have been in turmoil as investors fret over the future of the $85-billion-a-month Fed stimulus.

Traders are worried that improving conditions mean the US economy will not need the help the central bank has been providing.

The Fed has said it will turn the taps off once unemployment is low enough and the economy can stand on its own feet.

Despite this, US Treasury yields are approaching two-year highs.

With the US showing signs of improvement, analysts say the Fed will likely slow its bond-buying, which in turn will lead to higher rates at home and a repatriation of the money that flooded emerging markets when the scheme was unveiled.

However, Evan Lucas, market strategist at IG in Melbourne, told Dow Jones Newswires: "There is no reason for Treasury yields to be this high.

"Inflation is near zero, official rates are not expected to be changed until 2015 and the underlying credit market is still shaky from uneven economic data."

Eyes are on the release Wednesday of minutes from the Fed's most recent meeting, with analysts looking for clues to its next move.

Wall Street, which on Friday ended one of its worst weeks this year, extended those losses on Monday. The Dow fell 0.47 percent, the S&P 500 lost 0.59 percent and the Nasdaq shed 0.38 percent.

With yields rising in the United States, the US dollar also climbed against emerging units.

It hit a record 64.11 Indian rupees while also buying 10,490 Indonesian rupiah, near a four-year high, from 10,419 rupiah. The Thai baht was at a one-year low of 31.61 to the dollar, compared with 31.34 baht on Tuesday.

The rupee is Asia's worst-performing major currency this year, falling 16 percent against the dollar as the Fed's wind-down added to mounting concerns about the state of India's ailing economy.

However, the dollar fell to 97.12 yen, compared with 97.56 in New York on Monday, after peaking at 97.85 yen in morning trade on Tuesday.

The euro bought $1.3344 and 129.48 yen, against $1.3334 and 130.09 yen.

On oil markets, New York's main contract, West Texas Intermediate for delivery in September, was down $1.27 at $105.83. Brent North Sea crude for October eased 75 cents to $109.15.

Gold fetched $1,359.48 at 0810 GMT from $1,375.20 late Monday.

In other markets:

-- Mumbai fell 0.34 percent, or 61.48 points, to 18,246.04 points, after the rupee hit a fresh record low against the dollar. India's vehicle maker Tata Motors plunged 4.66 percent to 286.55 rupees, while private oil explorer Essar Oil dropped 4.96 percent to 63.2 rupees.

-- Bangkok fell 1.98 percent, or 27.62 points, to 1,370.86. Coal producer Banpu fell 6.55 percent to 257.00 baht, while oil company PTT Exploration and Production added 1.90 percent to 160.50 baht.

-- Singapore fell 1.40 percent, or 44.58 points, to 3,128.75. DBS Bank shed 1.61 percent to S$16.49, while vehicle distributor Jardine Cycle and Carriage was 4.35 percent lower at S$36.74.

-- Kuala Lumpur lost 1.85 percent, or 32.94 points, to close at 1,745.42. MISC ended 5.3 percent lower at 4.80 ringgit, while Malayan Banking fell 4.6 percent to 9.96 ringgit. Astro Malaysia Holdings picked up 1.7 percent to 3.00 ringgit.

-- Wellington rose 0.11 percent, or 5.13 points, to 4,508.36. Fletcher Building was up 0.12 percent at NZ$8.21 and Contact Energy added 1.51 percent to NZ$5.38, but Air New Zealand was down 1.08 percent at NZ$1.38.

-- Taipei fell 0.86 percent, or 67.56 points, to 7,832.65. Smartphone maker HTC fell 2.29 percent to T$149.50, while Taiwan Semiconductor Manufacturing Co was 1.15 percent lower at T$94.40.