Asian Markets Drop Wednesday, Mirroring U.S.

by: SA Eli Hoffmann

Asian indexes fell Wednesday across the board after traders were spooked by the dropoff in U.S. markets when the Fed dropped its target rate 0.25%, disappointing those who had hoped for a more robust 0.5% cut (full story I, II).

The Nikkei fell 0.7%. Losers included Canon (CAJ -2.4%), Nissan (OTCPK:NSANY -2.3%), Softbank (OTCPK:SFTBF -1.7%) and Honda (HMC -1.3%). Yahoo Japan (YHOO) was up 2.5%.

The Hang Seng plunged 2.41%. Cnooc (CEO -3.8%) and China Unicom (CHU -3.4%) were big losers. MTR Corp. was the only index constituent to close up.

Shanghai's Composite Index fell 1.54%.

"I think Tokyo is reacting more to Wall Street's negative reaction than to the Fed's decision itself," said Yosuke Shimizu of Monex Inc.

The yen declined against all 16 of the most-active currencies as traders speculated investors will begin moving holdings out of a weaker Japanese market into higher-yielding overseas markets. "Winter bonuses will be paid out and retail investors may buy high-yielding assets," one analyst said. "This should be supportive of foreign currencies against the yen." On Tuesday Bank of America forecasted December Japan capital outflows at $7.2 billion; it cut its yen forecast to 110/dollar from 108.

Sources: Reuters, Bloomberg
Additional Reading: Why Markets Are Down Post Fed Cut

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