By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Asian markets fell Wednesday after
weaker-than-expected Chinese manufacturing data and before the
Federal Reserve's policy decision, with Japanese stocks retreating
as the yen strengthened and Australian shares pulling back from
near five-year highs.
Trading volumes were light as many regional markets were closed
for Labor Day or other local holidays -- including those in
mainland China, Hong Kong, India, South Korea, Taiwan and
Singapore. Investors were also cautious ahead key central-bank
meetings this week.
"It certainly feels like there is a 'calm before the storm'
effect at the moment. The [European Central Bank] and the [Federal
Open Market Committee] will both sit down this week and nut out
cash rates and policy positions alike, and this will drive the May
markets," said IG Markets strategist Evan Lucas.
Japan's Nikkei Stock Average fell 0.4%, and the broader Topix
index lost 0.6%.
Australia's S&P/ASX 200 dropped 0.5%, retreating a day after
the benchmark ended at its highest level since June 2008.
Both markets remained weak after an the official version of
China's manufacturing Purchasing Managers' Index (PMI) eased to
50.6 in April from 50.9 in March.
"A careful analysis of breakdown reveals stabilized domestic
demand and will help alleviate some concerns. Despite the
weaker-than-expected PMI today, we still expect major activity
indicators to show a moderate growth recovery in April and the
second quarter," said Bank of America Merrill Lynch chief China
economist Ting Lu.
"On policies, we expect overall monetary and fiscal policies to
remain accommodative, though we see no need for significant
stimulus," Lu said.
The FOMC was due to announce its monetary policy decision later
Wednesday, while the ECB was widely expected to cut its benchmark
interest rate by a quarter-point to a record low of 0.5%.
The decline in Tokyo and Sydney came even as the S&P 500
Index (SPX) ended at a record level for a second straight day
overnight in the U.S, aided by corporate earnings.
For Japanese stocks, the weak start to May followed a
spectacular performance in April, when the Nikkei Average surged
nearly 12% to tower over other regional benchmarks, driven by hopes
an aggressive monetary policy would weaken the yen and boost
corporate profits.
Among the major movers in Tokyo on Wednesday, shares of Sharp
Corp. (SHCAY) tumbled 5% after the Nikkei newspaper reported the
company may suffer a bigger net loss than it had forecast for the
last financial year ended March 31.
Several other exporters also retreated as the U.S. dollar
(USDJPY) traded lower against the yen for much of the Japanese
session.
Shares of Nissan Motor Co. (NSANY) lost 1.7%, and Canon Inc.
(CAJ) gave up 1.6%.
Airline stocks retreated on worries about the financial impact
from the grounding of the Boeing Dreamliner jet fleet. Japan
Airlines Co. lost 4.4%, and ANA Holdings Co. (ALNPY) shed 1.4%.
The drop came even as ANA reported a 53% jump in annual profits
Tuesday, while Japan Airlines posted a better-than-forecast annual
profit of Yen171.67 billion after nearly three years in
bankruptcy.
Daihatsu Motor Co. (7262.TO) shed 0.4% following a Nikkei
newspaper report that the company has missed out on sales of 17,000
units of a new compact car due to delays by the Indonesian
government.
In Sydney, resource-sector stocks remained downbeat after the
Chinese PMI data, with diversified mining giant BHP Billiton Ltd.
(BHP) off 1.6% and iron-ore producer Fortescue Metals Group Ltd.
(FSUGY) 0.6% lower.
Banks retreated a day after strong results from Australia &
New Zealand Banking Group Ltd. (ANZBY) pushed the sector sharply
higher.
ANZ shares were down 0.5%, while Commonwealth Bank of Australia
(CBAUY) gave up 0.7%.
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