Asian stocks declined Friday as losses on Wall Street and the yen’s strength weighed on investor sentiment.
Japan’s benchmark Nikkei 225 index shed 0.6 percent to 15,6661.63 while South Korea’s Kospi lost 0.8 percent to 1,959.48. Hong Kong’s Hang Seng retreated 0.9 percent to 20,092.67 and the Shanghai Composite Index in mainland China fell 1.1 percent to 2,974.17. Australia’s S&P/ASX 200 slid 0.6 percent to 5009.90. Taiwan’s benchmark rose but those in Southeast Asian markets fell.
The dollar rebounded slightly against Japan’s currency but the yen was hovering near its highest level in almost a year and a half. The dollar rose to 108.65 yen after sinking as low as 107.70 in the previous day’s trading, which was the weakest since October 2014. As global markets fluctuate, investors are shifting from riskier assets toward safer bets, including the yen, which has been traditionally seen as a haven.
However, the yen’s strength threatens to undermine Japanese Prime Minister Shinzo Abe’s plan to revive Asia’s second biggest economy through monetary easing and fiscal stimulus. Analysts are starting to think the government may have to intervene if the yen falls further.
“With investors coming to terms that Japan’s policies have little on offer to counter yen appreciation, we cannot rule out a move to 105 in the near term,” said Stephen Innes, senior forex trader at OANDA. “However, with Prime Minister Abe set to announce an economic stimulus package in May, we can also not rule out new cash injections through ‘helicopter drops.’ As extreme as it may sound, it may be all that’s left in Japan’s fiscal policy arsenal.”
Major U.S. benchmarks had their biggest loss in a month and a half as banks and technology companies tumbled. The Dow Jones industrial average fell 1 percent to 17,541.96. The Standard & Poor’s 500 index shed 1.2 percent to 2,041.91. The Nasdaq composite index lost 1.5 percent, to 4,848.37.
Benchmark U.S. crude rose 65 cents to $37.91 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 49 cents, or 1.3 percent, to settle at $37.26 per barrel on Thursday. Brent crude, used to price international oils, rose 55 cents to $39.98 a barrel in London.
In other foreign exchange trading, the euro declined to $1.1366 from $1.1376.