Growing anxiety over central banks' policies sent Asian stocks into free fall on Thursday. Also, doubts about the pace of global growth intensified after the World Bank cut its outlook for global growth, citing deeper-than-expected recession in the euro area and a slowdown in major emerging markets from China to Brazil. With the Fed holding its next policy meeting on June 18-19, investors are grappling with the market implications of a possible tapering of U.S. quantitative easing.
Japanese shares nosedived, with the Nikkei average plunging 6.4 percent to enter a bear market as investors braced for the fallout from the potential effects of QE tapering in the coming months. The dollar slumped to a 10-week low versus the yen as investors sought safe-haven assets in the face of tumbling stock markets.
The Nikkei average soared more than 80 percent since mid-November when Shinzo Abe began to talk of the need for massive monetary easing to pull the world's third-largest economy out of deflation. The Nikkei average ended at 12,445, its lowest level since April 3, while the broader Topix index slumped 4.8 percent.
China's Shanghai Composite index tumbled 2.8 percent as trading resumed after a three-day Dragon Boat Festival holiday. Investors digested trade and industrial production data released over the weekend, which showed China is heading towards its second consecutive quarter of slower growth. Hong Kong's Hang Seng index fell 2.2 percent to close at an eight-month low.
Australian shares extended losses, reflecting weakness in the U.S. and European markets overnight and the meltdown in Asia. The benchmark S&P/ASX 200 fell 1.4 percent to a 5 1/2 month low early in the session before recouping most of its loss to finish down 0.6 percent at 4,696, helped by a rebound in banks.
Investors have started factoring in the possibility of the Fed tapering its bond-buying program as early as the June meeting after Bank of England official Andrew Haldane warned yesterday that the bursting of a bond bubble is the biggest threat for financial markets right now. Miners led the declines, with BHP, Rio Tinto, Fortescue Group and Newcrest falling 2-4 percent, while banks Commonwealth, NAB, ANZ and Westpac rose 1-3 percent.
On the macroeconomic front, total employment in Australia increased unexpectedly in May, owing to an increase in part-time employment, the latest figures from the Australian Bureau of Statistics showed. The number of employed persons rose 1,100 from a month earlier to 11.66 million in May despite full-time employment decreasing by 5,300. The unemployment rate dipped marginally to 5.5 percent from 5.6 percent in April.
South Korea's Kospi average fell 1.4 percent to 1,883 as foreign investors offloaded local shares amid uncertainty surrounding forecasts of long-term interest rates and the outlook for global exchange rates.
Meanwhile, as widely expected, the Bank of Korea's monetary policy board decided to hold the nation's benchmark interest rate unchanged at 2.50 percent after trimming rates by 25 basis points in May. The central bank expects CPI to remain low for the time being and the global economy to sustain its modest recovery going forward, although uncertainties persist regarding the Fed's anticipated action and the implementations of fiscal consolidation in major countries.
New Zealand shares fell to a two-month low on concerns stocks have surged ahead of their earnings growth. The benchmark NZX-50 index slipped 40 points or 0.9 percent to 4,402. Heavyweights Telecom and Fletcher Building fell 2-4 percent, while Hallenstein Glasson Holdings plunged 7.5 percent to a 7-month low after issuing a profit warning. Among other retailers, Michael Hill International, Pumpkin Patch and the Warehouse Group fell between 1.5 percent and 2.4 percent.
Air New Zealand tumbled 3 percent after the High Court ratified a $7.5 million penalty against the airline for price-fixing in air cargo. Pyne Gould Corp soared 15 percent after the company lifted its profit forecast to 30 million dollars for the year ending June. On the economic front, the Reserve bank of New Zealand left its official cash rate at 2.5 percent even as the central bank said growth in the New Zealand economy remains uneven across sectors.
Elsewhere, benchmark indexes in India, Indonesia, Malaysia, Singapore and Taiwan were down 1-2 percent.
The major U.S. averages fell between 0.8 percent and 1.1 percent overnight, with the Dow dropping below the psychologically-important 15,000 level, driven by lingering concerns about the outlook for the Federal Reserve's stimulus program. Reports of violent crackdowns on protesters in Turkey and a lackluster Treasury bond auction also weighed on the markets.
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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.