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Asia stocks decline in subdued trade; Fed policy in focus

Published 11/04/2013, 02:44 AM
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Investing.com - Asian stock markets were mostly lower on Monday, as ongoing uncertainty over the direction of U.S. monetary policy kept investors in a cautious mood.

During late Asian trade, Hong Kong's Hang Seng Index declined 0.3%, Australia’s ASX/200 Index ended down 0.38%, while Japan’s Nikkei 225 Index remained closed for a public holiday.

Market players looked ahead to the release of key U.S. economic data later in the week to help assess the timing for a reduction in the Fed’s bond-purchasing program.

The U.S. is set to release preliminary data on third quarter economic growth on Thursday, while October’s highly-anticipated nonfarm payrolls report is scheduled for Friday.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of global equities.

The central bank sounded more optimistic than anticipated in its assessment of the economy following its policy-setting meeting last week, sparking speculation the Fed could start tapering stimulus at its December meeting.

In Hong Kong, the Hang Seng inched lower despite data showing that service sector activity in China improved to a 14-month high in October.

The China banking sector remained focus. China Construction Bank shares rose 0.5%, while China Minsheng Bank dropped 1.6%.

Market players remained concerned by last week’s moves in China's money market rates, amid lingering concerns over a cash crunch.

China's short-term borrowing costs jumped to their highest level since June last week after large bad debt write-downs by major banks fanned worries about the country's banking system.

Index heavyweight HSBC Holdings was down 0.5% as investors readjusted positions in the stock ahead of the release of the lender’s earnings report due after the closing bell.  

Elsewhere, in Australia, the benchmark ASX/200 Index eased down despite the release of stronger-than-expected Australian retail sales data.

The Australian Bureau of Statistics said retail sales there rose 0.8% last month after a September gain of 0.5%. Analysts expected an October increase of 0.4%.

The news boosted shares in the retail sector, with David Jones shares rallying 4.5%, while Myer Holdings added 2.4%.

The big four banks were mostly lower as investors looked ahead to Tuesday’s interest rate decision by the Reserve Bank of Australia.

National Australia Bank shares dropped 0.55%, while ANZ Banking Group and Westpac Banking Group slumped 0.6% and 1.2%.

Looking ahead, European stock market futures pointed to a steady open.

The EURO STOXX 50 futures pointed to a flat open, France’s CAC 40 futures added 0.05%, London’s FTSE 100 futures advanced 0.05%, while Germany's DAX futures pointed to a flat open.  

Investors will be awaiting the outcome of Thursday’s European Central Bank policy meeting, amid growing expectations that the central bank will cut rates in order to safeguard the economic recovery in the region.

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