Asia Stocks Drop as Japan Markets Reopen With Carmakers Falling

  • Automakers and parts suppliers slide in Tokyo amid VW scandal
  • Janet Yellen to speak in Amherst, Massachusetts on policy

Asian stocks fell, dragged down by a retreat in Japanese shares as the nation’s markets opened after a three-day holiday. Industrial and consumer companies led losses.

Softbank Group Corp. sank 6.3 percent in Tokyo, the biggest drag on the regional benchmark index, as the market values of its biggest U.S. holdings, Alibaba Group Holding Ltd. and Sprint Corp., tumbled. NGK Insulators Ltd., which counts Volkswagen AG as a customer, plunged 7 percent in the wake of VW’s emissions-cheating scandal. Commonwealth Bank of Australia led a rebound in the nation’s lenders after touching a two-year low on Wednesday.

The MSCI Asia Pacific Index dropped 1.1 percent to 124.43 as of 4:14 p.m. in Hong Kong. Global shares retreated and equity volatility surged while Japan was shut as investors weighed comments by Federal Reserve officials about the timing of U.S. interest-rate increases and renewed concern over China’s slowing economy sent raw-material prices tumbling.

“Japanese markets have still got some catch up to do after the uncertainty that’s been washing through global markets,” Tony Farnham, Sydney-based strategist at Patersons Securities Pty Ltd., said by phone. “The issue is gauging the extent of the slowdown in China and the ongoing debate about whether the Fed is doing the right thing.”

Fed Chair Janet Yellen will deliver a speech on Thursday that will give her an opportunity to emphasize that U.S. rates remain on track to rise in 2015, or validate the view of many investors that liftoff will be delayed until next year. European Central Bank President Mario Draghi said Wednesday it’s too soon to say whether risks to the economic outlook warrant a step-up in ECB stimulus.

Fed Odds

With two Federal Open Market Committee meetings remaining this year, investors see the chances of an increase in October at 18 percent, and a move by December at 43 percent, according to trading in federal funds futures. Regional Fed presidents John Williams of San Francisco and Dennis Lockhart of Atlanta, both 2015 FOMC voters, have said they expect higher rates this year.

“Depending on whether you’re in the bear or the bull camp, every time a Fed speaker comes out, it either cheers you or sends you running for a handkerchief to cry into,” said Farnham.

Japan’s Topix index retreated 2.4 percent. The nation’s carmakers and parts manufacturers traded for the first time on Thursday after U.S. officials caught Volkswagen cheating on emissions tests, a scandal that’s wiped 20 billion euros ($22 billion) off the company’s market value. Volkswagen Chief Executive Officer Martin Winterkorn resigned Wednesday, and a gauge of global auto manufacturers compiled by Bloomberg has fallen 5 percent this week.

Hong Kong’s Hang Seng Index lost 1 percent, while the Hang Seng China Enterprises Index, also called the H-shares gauge, declined 1.1 percent. The HSCEI index has fallen 36 percent from this year’s high in May as five Chinese interest-rate cuts since November and plans to boost state spending have yet to revive growth amid overcapacity and producer-price deflation.

Preliminary data on Wednesday signaled a factory gauge falling to the lowest level since the depths of the global financial crisis, while a Bloomberg survey of economists showed China will further cut its target for growth next year.

China will further cut its target for economic growth next year amid excess capacity, sluggish investment and weaker manufacturing, economists said. Government leaders will announce a growth objective between 6.5 percent and 7 percent for 2016, according to eight of 15 economists in a Bloomberg News survey conducted Sept. 17-22. Four said they expect a 6.5 percent goal.

India’s S&P BSE Sensex index advanced 0.4 percent. Taiwan’s Taiex Index slid 0.9 percent. The Shanghai Composite Index climbed 0.9 percent, South Korea’s Kospi index rose 0.1 percent and Australia’s S&P/ASX 200 Index added 1.5 percent. New Zealand’s S&P/NZX 50 Index rose 0.4 percent. Markets in Singapore, Indonesia and Malaysia are closed for holidays.

E-minis on the Standard & Poor’s 500 Index advanced 0.3 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE