Asia stocks down as Fed fears weigh on markets

May 29, 2013 • Business

A man talking on a mobile phone walks by an electronic stock board of a securities firm in Tokyo, Tuesday, May 28, 2013. Investors seeking bargains helped push Japan’s benchmark stock index higher Tuesday after plunging 3 percent the day before. The Nikkei has been on a rollercoaster ride since last Thursday, when it plummeted more than 7 percent after interest rates on the country’s benchmark 10-year bond spiked to above 1 percent for the first time in a year. (AP Photo/Itsuo Inouye)

BANGKOK (AP) — Concerns that the Federal Reserve might start scaling back its stimulus program due to a seeming improvement in the U.S. economy sent [auth] Asian stock markets lower Thursday.

Sharp rises in global stock markets this year have been partly fueled by central bank actions to support economies in the U.S., Europe and Japan. Positive signs of growth in the U.S., including data released Tuesday showing improved consumer confidence and housing prices, have helped boost Wall Street stocks to record highs.

However, an improving U.S. economy increases the chance that the Fed might ease back on its massive bond-buying program, known as quantitative easing. The purchase of $85 billion a month in Treasury bonds has helped keep interest rates super-low and been a boon to stock markets, where investors have fled in search of higher returns.

Japan’s Nikkei 225 index fell 2.8 percent to 13,932.92. Hong Kong’s Hang Seng shed 0.2 percent to 22,518.85. Australia’s S&P/ASX 200 dropped 1.5 percent to 4,900.90. Benchmarks in Singapore, Taiwan, Indonesia, and the Philippines also fell. South Korea went against the flow, rising 0.2 percent to 2,005.99.

The lack of major data releases for the day deprives investors of reasons to wade into stocks, analysts said.

“A lack of first tier data releases today will limit activity although the tone will likely remain relatively downbeat,” said Mitul Kotecha of Credit Agricole CIB in a market commentary.

The latest speculation surrounding the Fed came after the release of positive consumer confidence and housing news on Tuesday. That led investors to fret over the prospect of the Fed reducing its bond-buying.

With the approach of the end of the month, investors also were booking profits.

Benchmark oil for July delivery was up 5 cents to $93.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract for the benchmark grade fell $1.88 to close at $93.13 a barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.2958 from $1.2934 late Thursday in New York. The dollar rose to 101.23 yen from 101.15 yen.

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