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Shares in Asia down on renewed speculation for Fed hike this month

Published 09/11/2016, 11:05 PM
Updated 09/11/2016, 11:07 PM
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Investing.com - Asian share fell sharply on Monday as investors shrugged off solid manufacturing orders in Japan and focused on chances that the Fed may raise rates this month.

The Nikkei 225 slumped 1.51%. Earlier, Japan reported core machinery orders jumped 4.9% month-on-month in July, a second straight monthly increase and well above the 3.5% fall seen, and showed a 5.2% gain year-on-year, compared with a 0.3% increase expected. The data highlight strong growth in a key segment of the economy.

"There was a widespread increase in orders from both the manufacturing and non-manufacturing sectors. A three-month average also showed a clear pickup in core orders in July," a Cabinet Office official said.

At the same time, PPI figures from Japan showed a 0.3% fall in August month-on-month, compared with a decline of 0.2% expected and a drop of 3.6% year-on-year, compared with a 3.5% decline seen. The weaker than expected producer prices signal continued stubborn inflation prospects. In its quarterly Outlook Report issued in July, the BoJ said risks to its inflation projections are skewed to the downside as there is "considerable uncertainty" over global growth and longer-term inflation expectations in Japan.

Also down sharply, the S&P/ASX 200 dropped 2.25% and the Shanghai Composite fell 1.66%.

Remarks on Friday from Boston Fed President Eric Rosengren said that a reasonable case can be made” for hiking rates in order to avoid overheating the economy, offsetting last week’s lackluster U.S. jobs report that had dampened expectations for a rate increase at the Fed’s next meeting, which is scheduled for September 20-21.

Investors currently price a 24% chance of a rate hike at the Fed's September meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.

Last week, U.S. stocks were lower after the close on Friday, as losses in the Utilities, Telecoms and Basic Materials sectors led shares lower.

At the close in NYSE, the Dow Jones Industrial Average lost 2.13% to hit a new 1-month low, while the S&P 500 index lost 2.45%, and the NASDAQ Composite index lost 2.54%.

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