Asia stock markets fall on Fed uncertainty

AP News
Posted: Jun 02, 2013 11:01 PM

BANGKOK (AP) — Uncertainty about the U.S. Federal Reserve's next course of action and a sharp, sudden plunge on Wall Street sent Asian stock markets lower Monday.

Japan's Nikkei 225 index lost 2.2 percent to 13,475.64, echoing U.S. stock markets losses Friday. The Dow dropped more than 200 points, its worst drop in six weeks.

The Federal Reserve is spending $85 billion a month on buying bonds to push down interest rates in hopes of spurring borrowing and spending. That has propelled investors into stock markets in search of higher returns.

Encouraging reports on housing and hiring, along with a soaring stock market, have led many to suspect that the Fed could cut back on its bond buying in the coming months. Some believe the stock market could plunge without the Fed's support.

Hong Kong's Hang Seng rose 0.5 percent to 22,495.61. South Korea's Kospi fell 0.1 percent to 1,998.30. Australia's S&P/ASX 200 fell marginally to 4,924.50. Benchmarks in Indonesia, Singapore and Taiwan fell. Benchmarks in mainland China were mixed.

Analysts at Credit Agricole CIB in Hong Kong said that "the background is set for a further increase in uncertainty and market volatility this week."

On Friday, the Dow Jones industrial average closed down 1.4 percent to 15,115.57. The Standard & Poor's 500 index fell 1.4 percent, to 1,630.74. The Nasdaq composite index fell 1 percent to 3,455.91.

Benchmark oil for July delivery fell 32 cents to $91.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.64 to close at $91.97 a barrel on the Nymex on Friday.

In currencies, the euro rose to $1.3005 from $1.2981 late Friday in New York. The dollar fell slightly to 100.63 yen from 100.69 yen.


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