Asian stocks fell on Wednesday as uncertainty prevailed over when the Federal Reserve would begin scaling down its massive bond-buying program.
Federal Reserve Bank of Kansas City President Esther George yesterday supported slowing the pace of bond-buying "as an appropriate next step for monetary policy" rendering investor mood cautious ahead of a slew of U.S. economic reports due later in the day and before Friday's all-important monthly jobs report.
Growth worries also returned to the fore after Australia's growth data undershoot expectations and the pace of growth in China's services sector showed little change in May from the previous month.
China's service sector grew only marginally in May, adding more downside risks to China's growth rate in the second quarter. A survey by Markit Economics and HSBC showed that the headline business activity index edged up to 51.2 from 51.1 in April, with new orders increasing modestly from the previous month.
The composite output index that measures activity at both manufacturing and service sector firms fell to 50.9 from 51.1 in April, suggesting near-stagnation in private sector output.
Japanese shares tumbled, tracking a volatile yen, which firmed up following Prime Minister Shinzo Abe's "Third Arrow" growth strategy speech. Abe outlined a blueprint for rejuvenating the country's ailing economy with plans to boost per-capita income by 3 percent annually, increase capital spending by 10 percent over the next three years and set up special economic zones to attract foreign businesses. Investors were disappointed by lack of specific measures to bolster growth in the world's third-largest economy.
The Nikkei average plunged 519 points or 3.83 percent to 13,015, a two-month low, while the broader Topix index retreated 3.2 percent. Market heavyweight Fast Retailing plummeted 9.5 percent, brokerage Nomura Holdings slumped 7.6 percent and exporter Tokyo Electron tumbled 6 percent. Mitsubishi Motors Corp. fell 5.7 percent following its announcement that it will recall 4,460 imported Outlander vehicles in China manufactured between mid-November 2012 and late March 2013.
China's Shanghai Composite index edged down marginally and Hong Kong's Hang Seng lost a percent to end at a six-week low as China's service sector data painted a mixed picture of the world's second-largest economy.
Australian shares slumped to a four-month low, with a pair of weaker-than-expected economic reports weighing on the market. The benchmark S&P/ASX 200 fell 66 points or 1.34 percent to 4,835, dragged down by banks and miners. BHP Billiton, Rio Tinto and Whitehaven Coal lost about 1.4 percent each, while Newcrest plunged 5.3 percent. Commonwealth slid 1.3 percent, while ANZ and Westpac fell about 3 percent each.
Macmahon Holdings plunged over 11 percent after a unit of Glencore Xstrata prematurely terminated a contract for mining services at the underground CSA copper mine in New South Wales.
Australia's gross domestic product gained a seasonally adjusted 0.6 percent in the first quarter of 2013 compared to the previous three months, the Australian Bureau of Statistics said, falling below expectations for 0.8 percent growth. Separately, activity in the services sector contracted to a 13-month low in May, a report from the Australian Industry Group showed. The AIG's performance of services index fell 3.5 points to 40.6, marking its 16th consecutive month of contraction.
South Korea's Kospi average retreated 1.5 percent to a near four-week low on deepening uncertainty over the course of U.S. monetary policy. STX Group shares as well as lenders to the group, Woori Finance Holdings and Hana Financial, bore the brunt of the selling on reports shipping firm STX Pan Ocean will soon enter court receivership.
New Zealand shares lost ground, weighed down by the downbeat Australian GDP data. The benchmark NZX-50 index fell 20 points or half a percent to 4,454. Dual-listed banks Westpac and ANZ lost 3-4 percent, leading the decliners on the exchange. Air New Zealand eased 0.3 percent after it agreed to settle an antitrust suit with the Commerce Commission.
Fletcher Building, the nation's largest construction company, declined 1.5 percent even as data from Statistics New Zealand showed residential building activity in New Zealand spiked a seasonally adjusted 12 percent in the first quarter of 2013 compared to the previous three months, marking the highest increase in 10 years. Heartland New Zealand soared 6.3 percent to its highest level since February 2011 after the company decided to take an upfront charge against distressed assets.
The markets in Indonesia, Malaysia, Singapore and Taiwan were down between 0.1 percent and 1.1 percent. India's Sensex was marginally higher on recovery hopes after data showed activity in India's service sector expanded at its fastest pace in three months in May.
U.S. stocks ended a volatile session lower overnight, with continued uncertainty over the Fed's future course of action weighing on the markets. The Dow slipped half a percent, while the tech-heavy Nasdaq and the S&P 500 dropped about 0.6 percent each.
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Business News
May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.