Asian stocks tumbled on Thursday after minutes of the Federal Reserve's April 30-May 1 meeting revealed "a number" of members favor tapering the central bank's $85-billion bond-buying program as early as the June meeting if the labor market continues to improve. Fed chief Ben Bernanke also hinted that an exit could be initiated in the "next few meetings" if the incoming data supports it.
Dampening investor sentiment further, preliminary data from HSBC showed that China's manufacturing activity contracted for the first time in seven months in May, reflecting slower domestic demand and ongoing external headwinds. The purchasing managers' index showed a preliminary reading of 49.6 in May compared with a final reading of 50.4 in April.
Japan's Nikkei index ended a roller-coaster session down about 7.3 percent below 14,500, snapping a four-session winning streak. The broader Topix index lost 6.9 percent. The Nikkei index climbed more than 300 points early in the session before the release of sluggish economic data out of China.
Investor confidence also took a hit after yields on the benchmark 10-year Japanese government bonds jumped to as high as 1.0 percent, its highest level in over a year, prompting the Bank of Japan to announce a two trillion yen ($19 billion) fund-supplying operation to curb volatility in bond markets. Shares sensitive to interest rates including real estate and consumer finance firms bore the brunt of the selling. Among exporters, Canon, Fanuc, Honda Motor and Toyota Motor fell 4-5 percent.
In economic news, capital spending by Japanese businesses may continue moderate uptrend in the coming months as companies' profits improve, the Bank of Japan said in its monthly report. The central bank was also upbeat on industrial production and said production has stopped decreasing and signs of picking up have become increasingly evident, reflecting developments in demand both at home and abroad.
Australian shares tumbled, with heavyweight banks and miners bearing the brunt of the selling after data showed China's manufacturing sector was slowing. The benchmark S&P/ASX 200 dropped 2 percent, the most in two months, to a one-month low of 5,062. BHP Billiton lost 1.1 percent, Rio Tinto declined 2.1 percent and smaller rival Fortscue Metals Group retreated 2.8 percent. Gold miner Newcrest, which is fighting a legal action by Gold and Copper Resources against the renewal of an exploration license near its Cadia East project in NSW, closed down 2.2 percent.
Among the major banks, Commonwealth, NAB, ANZ and Westpac lost 3-4 percent. Bendigo & Adelaide Bank declined 2.7 percent, Bank of Queensland tumbled 3.9 percent and investment bank Macquarie Group closed 3.3 percent lower. QBE Insurance, which has exposure to the U.S. market, soared 6.6 percent after the Australian dollar fell to a one-month low against the greenback.
New Zealand shares lost ground in the wake of Bernanke's comments and concerns about the strength of China's economic recovery. The benchmark NZX-50 index slid half a percent to 4,589. Guinness Peat Group tumbled 3.9 percent after Chairman Rob Campbell told shareholders in Auckland the investment firm will have to keep certain corporate functions at GPG for longer than it intended.
Fisher & Paykel Healthcare led the gainers on the exchange, climbing 5.6 percent, after the maker of breathing masks and respirators reported a record annual profit and said it expects to beat analyst estimates for 2014 profit. Shares of retirement village operator Ryman Healthcare rose 1.1 percent to a record high.
Elsewhere, South Korea's Kospi average fell 1.2 percent in thin volume, mirroring extremely weak Asian cues. China's Shanghai Composite index lost 1.2 percent on growth concerns, while Hong Kong's Hang Seng index lost 2.5 percent. India's Sensex was down 1.9 percent, Indonesia's Jakarta Composite index shed 1.7 percent, Malaysia's KLSE Composite index declined 0.6 percent, the Taiwan Weighted average retreated 1.9 percent and Singapore's Straits Times index closed 1.8 percent lower.
Singapore's manufacturing production advanced 4.7 percent year-over-year in April, reversing last month's 3.8 percent fall, due to a surge in biomedical output, the Economic Development Board reported. Economists had forecast only 1.6 percent increase. Another report showed that inflation in Singapore slowed more than expected in April to its lowest level in more than three years.
U.S. stocks fell sharply overnight after minutes from the latest U.S. Federal Reserve meeting showed some officials were open to scaling back stimulus measures as early as June. The Dow slid half a percent, the tech-heavy Nasdaq fell 1.1 percent and the S&P 500 dropped 0.8 percent.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.