Investing.com – Asian stocks fell sharply on Tuesday after poor economic data from the U.S. and the Reserve Bank of Australia’s decision to keep its cash rate at a record low of 2.5%.
Australia’s central bank said slightly firmer consumer demand foreshadows a solid expansion in housing construction that along with improved business conditions and confidence are positives, but that waning resources investment and weak labor demand and wages offset those factors, setting the stage for a period of rate stability.
In Japan, SoftBank rose 2.4% after an upgrade by Merrill Lynch.
Chinese markets remained closed for holiday.
The Nikkei was down 4.18%, Hang Seng fell 0.48% and Australia’s S&P/ASX fell 1.44%.
On Monday, U.S. stocks plunged on fears that the U.S. economy could be hitting a soft patch.
At the close of U.S. trading, the Dow Jones Industrial Average fell 2.08%, the S&P 500 index fell 2.28%, while the Nasdaq Composite index fell 2.61%.
Stocks took a nosedive after the Institute for Supply Management said its manufacturing index fell to a seven-month low in January, as new orders slumped.
The ISM’s manufacturing purchasing managers’ index came in at 51.3 in January, down from 57.0 in December.
Analysts were expecting the index to inch down to 56.4 in January.
The report added new order growth fell at its fastest rate in 33 years, with the new orders index dropping to 51.2 from 64.4 in December. The employment index fell from 55.8 in December to 52.3, the weakest since June.
Also on Monday, U.K.-based Markit Economics reported that its U.S. manufacturing PMI came in at a three-month low of 53.7 for January, missing expectations for a 53.8 reading.
Ongoing concerns that emerging markets are cooling as well added to the selloff.
Leading Dow Jones Industrial Average performers included Pfizer, up 0.63%, Chevron, down 0.44%, and Visa, down 0.93%.
The Dow Jones Industrial Average's worst performers included AT&T, down 4.11%, Walt Disney, down 3.60%, and Microsoft, down 3.57%.