Asian stocks retreated on Wednesday, with uncertainty over the Federal Reserve’s future rate hike path, more disappointing Chinese economic data and fresh concerns over the health of the U.S. banking sector keeping investors nervous.
U.S. consumer spending continues to show signs of persistent strength, raising concerns that interest rates will remain higher for longer.
Data showed that China’s house prices continued to decline in July, in a further sign of the property slowdown.
Fitch has warned that it may downgrade dozens of U.S. banks including JP Morgan Chase because of turbulence in the industry.
The dollar was on the front foot in Asian trade and oil extended overnight losses on China demand worries while gold edged up slightly against a backdrop of risk aversion.
Chinese shares fell sharply on signs of a faltering economy and the lack of meaningful stimulus from policymakers to revive growth.
The benchmark Shanghai Composite index fell 0.82 percent to 3,150.13 while Hong Kong’s Hang Seng index tumbled 1.36 percent to 18,329.30.
Japanese shares closed at a more than two-month low on concerns about weakening growth in China and fears of a possible downgrade of U.S. major banks.
The Nikkei average slumped 1.46 percent to 31,766.82 while the broader Topix index settled 1.29 percent lower at 2,260.84.
Banks led losses, with Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial losing 2-3 percent.
Uniqlo brand owner Fast Retailing gave up 1.9 percent and technology investor SoftBank lost 3.1 percent.
Seoul stocks slumped and the Korean won weakened to a three-month low in the wake of rising global uncertainties. The Kospi average plummeted 1.76 percent to 2,525.64.
Australian markets succumbed to selling pressure on China jitters, with tech, mining and financial stocks pacing the decliners.
The benchmark S&P/ASX 200 ended down 1.50 percent at 7,195.20, marking its biggest fall in about six weeks. The broader All Ordinaries index closed 1.44 percent lower at 7,411.80.
Lender NAB fell over 1 percent despite announcing plans to buy back as much as A$1.5 billion ($970 million) of its shares to help further bolster its balance sheet.
Across the Tasman, New Zealand’s benchmark S&P NZX-50 index recouped some early losses to finish 0.49 percent lower at 11,763.11 after the Reserve Bank kept interest rates steady.
U.S. stocks hit a five-week low overnight while longer-term Treasury yields hit their highest levels this year after data showed retail sales rose more than expected in July, denting dovish Fed bets.
The sell-off was compounded by weak economic data from China and a warning from Fitch that U.S. banks, including JPMorgan Chase, could be downgraded.
The Dow dropped 1 percent, the S&P 500 declined 1.2 percent and the tech-heavy Nasdaq Composite fell 1.1 percent.
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