Asian Stocks Fall for Fourth Day as Yen Weighs on Japan Shares

  • S&P 500 Index sinks 1.2% in New York trading on Tuesday
  • VIX surged 15% as investors plan for December U.S. rate rise

Asian stocks headed for a fourth day of declines after U.S. markets slumped on disappointing earnings, volatility spiked, and a stronger yen weighed on Japanese shares.

The MSCI Asia Pacific Index lost 0.4 percent to 139.25 as of 9:08 a.m. in Tokyo, while Japan’s Topix index sank 0.7 percent. The S&P 500 Index declined 1.2 percent, the most in a month, amid growing speculation the Federal Reserve will raise interest rates before the end of this year and Alcoa Inc. kicked off U.S. earnings season by disappointing investors. The CBOE Volatility Index jumped 15 percent to a three-week high. Commodity producers sank as a gauge of the U.S. dollar reached a two-month high, curbing the earnings outlook for mining firms.

“Stock markets are becoming nervous about the prospect of rising interest rates against a background of moderate profit growth and relatively high valuations,” said Ric Spooner, Sydney-based chief market analyst at CMC Markets Asia Pacific Ltd. “Investors are also likely to be cautious ahead of the Fed minutes due for release tonight. Given how critical the interest rate outlook is for markets at the moment, markets will be focused on the degree of support for a rate hike this year revealed in the Fed minutes.”

Valuations on Asia Pacific shares have returned to levels unseen in more than a year after the index surged more than 20 percent from this year’s low in February. The rally has stalled this month amid rising expectations for a U.S. rate increase.

Treasuries fell Tuesday, with 30-year bond yields touching the highest since June, on bets that inflation will pick up as investors await minutes from the Fed’s September meeting. Traders boosted odds for a December rate hike to almost 68 percent, up from 64 percent on Friday and about 50 percent two weeks ago as encouraging data signaled the U.S. economy is strong enough to cope with higher borrowing costs.

The yen climbed 0.2 percent to 103.32 per dollar on Wednesday after adding 0.1 percent on Tuesday, with exporters and banks weighing the most on Japan’s Topix.

South Korea’s Kospi index slid 0.4 percent. The gauge sank 1.2 percent on Tuesday as Samsung Electronics Co. tumbled after it asked retail partners to stop sales and exchanges of its Galaxy Note 7 smartphones, dragging down other technology shares. Samsung extended declines on Wednesday by falling 3.1 percent.

Australia’s S&P/ASX 200 Index slipped 0.8 percent, while New Zealand’s NZX 50 Index lost 0.3 percent. BHP Billiton Ltd., the world’s biggest miner, dropped 2.9 percent as U.S. crude traded below $51 a barrel, retreating from a 15-month high, on concern Russia isn’t fully committed to an OPEC deal to curb oil supply.

Shares in Hong Kong and China have yet to start trading. Futures on the S&P 500 were little changed, while contracts on Hong Kong’s Hang Seng Index slipped 0.5 percent in their most recent session.

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