Asia report: Most markets lower over central bank jitters

Most Asian markets finished lower on Wednesday, following sizeable losses on Tuesday in New York as traders jittered over what central banks could do next.

In Japan, the Nikkei 225 lost 0.69% to finish at 16,614.24, while the broader Topix was off 0.62% at 1,314.74.

Bond yields in Tokyo moved higher during the session, with the 10-year Japanese Government Bond moving to -0.015% during the afternoon, up from -0.04% a week earlier.

A report from the Nikkei newspaper during the day suggested the Bank of Japan could move deeper into negative interest rate territory, with the central bank holding a two-day policy meeting from 20 September,

On the corporate front, banking stocks were under pressure, with Mitsubishi UFJ down 3.17%, Mizuho Financial down 1.03% and SMFG finishing 0.99% lower.

Watchmaker Seiko Holdings finished down 5.95% after it slashed its profit forecasts.

The company said it now expects a group net profit of JPY 3bn in the full year to 31 March, down significantly from its previous projection of JPY 10bn.

In currencies, the yen moved weaker against the greenback, and was last 0.10% off at JPY 102.66 per $1.

On the mainland, the Shanghai Composite closed down 0.69% to 3,002.67, while the Shenzhen Composite was off 0.45% at 1,980.25.

In Hong Kong, the Hang Seng Index appeared to be bucking the trend in afternoon trading, though it did join the rest by end of play, settling down 0.11% at 23,190.64.

South Korean markets were closed for the first day of the three-day Mid Autumn Festival national holiday.

The sell-offs in much of Asia followed declines in US markets overnight, as investors looked beyond September towards the possibility of a Federal Reserve rate hike later in the year.

“The move is clearly related to a firming up of pricing for a December rate hike, with markets now expecting a 55% chance of a rate hike by the end of the year even as bets for a September rate hike fell,” said Mizuho currency strategist Wei Liang Chang.

Oil prices managed a rebound during Asian trading, following on from a tough US session in which the International Energy Agency warned that it could take longer for oil prices to reach equilibrium again, with the slowdown in oil demand growth occurring more rapidly than anticipated.

Earlier in the week, the Organisation of the Petroleum Exporting Countries that central bank decisions would be a key factor in determining the state of growth and the wider energy sector.

Brent crude was last up 0.09% at $47.14 and West Texas Intermediate added 0.36% to $45.06.

Australia’s S&P/ASX 200 managed to add 0.38% to close at 5,227.70, although the energy and materials sectors dragged behind, losing 1.44% and 0.61% respectively.

On the energy subindex, Oil Search lost 0.93%, Santos was off 5.65% and Woodside Petroleum was down 0.73%.

The major miners sold off as well, with BHP Billiton losing 1%, Fortescue Metals down 1.69% and Rio Tinto finishing 1.33% lower.

New Zealand shares didn’t manage to match their Australian counterparts, with the benchmark S&P/NZX 50 sliding 0.5% to 7,210.73, as local index selling continued to hurt the market.

The down under dollars were both stronger against the greenback, with the Aussie last ahead 0.14% at AUD 1.3380 and the Kiwi strengthening 0.3% to NZD 1.3746 per $1.