Asian markets opened lower on October 16 after Wall Street tumbled on US economic data, fuelling growth concerns.
Data from the US showed retail sales and producer prices both fell in September, dimming expectations of an interest rate hike by the central bank.
The S&P 500 fell as much as 3%, briefly turning negative for the year before closing down 0.8%.
Japan’s shares fell more than 2% to a four-and-a-half-month low.
In early trading the Nikkei 225 was at 14,751.77. The dollar was at 105.92 yen, flat from New York trade.
Asian markets opened lower after Wall Street tumbled on US economic data
Among the losers were shares of Toyota, down over 2% after the automaker issued a recall of 1.75 million vehicles on Wednesday.
Hong Kong shares opened down almost 1% as the Hang Seng Index fell 226.55 points to 22,913.50.
On the mainland, the Shanghai Composite fell 0.5% to 2,451.65 points after data showed that the rate of inflation in September fell, adding to evidence of a slowing economy.
In Australia, the benchmark S&P/ASX 200 was lower 1% at 5,194.80 points.
Shares of Woodside Petroleum, Australia’s largest independent oil and gas producer, were lower 0.1% despite its third quarter production results beating forecasts.
In South Korea, shares followed the global downtrend.
The benchmark Kospi was down 0.7% after the Bank of Korea cut its interest rate for the second time in three months on October 15, and also downgraded its growth forecasts for the economy for this year.
Asian markets and the euro have risen after EU officials agreed a bailout deal for Cyprus, easing fears that the country’s banking system problems may spread.
Cyprus will now get a 10-billion euro ($13 billion) cash injection to keep its banking system running and prevent it from crashing out of the eurozone.
Investors had feared that its exit from the bloc may escalate the region’s debt crisis and derail a global recovery.
Shares in Japan, South Korea, Hong Kong and Australia rose on the news.
“The news was what markets were waiting for, some kind of an agreement,” said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
Japan’s Nikkei 225 index rose 1.7%, South Korea’s Kospi gained 1.5%, Hong Kong’s Hang Seng added 0.6% and Australia’s ASX200 was up 0.5%.
A failure to reach a deal may have seen the European Central Bank (ECB) cut emergency funding to Cyprus’s two biggest banks, leading to an effective bankruptcy of Cyprus’s government.
The fears were that such a move may prompt the country’s exit from the bloc.
Many analysts had been concerned that Cyprus’s exit may cause a loss of confidence across the eurozone and prompt investors to withdraw from other troubled economies of the bloc, such as Greece.
These concerns had seen investors ditch the euro over the past few days in favor of other assets, such as the Japanese yen and US dollar, seen as comparatively safer.
Asian markets have risen after EU officials agreed a bailout deal for Cyprus
However, news of the Cyprus deal boosted the euro.
The single currency gained 0.8% against the US dollar. It was trading at $1.3044 in early Asian trade.
It rose 1.3% against the Japanese yen to trade at 123.81 yen.
“This will likely limit the euro’s downside, with those who shorted the euro covering their positions, and improve general risk sentiment,” said Hiroshi Maeba, head of foreign exchange trading for UBS in Tokyo.
Ben le Brun, an analyst at OptionsXpress in Sydney, added that the deal was likely to have a positive impact on the oil markets as well.
“We should see some positive sentiment reverberate through energy markets overall for at least the next 24 to 48 hours,” he said.
Brent Crude rose 0.3% to $108.34 per barrel in Asian trade, while US Light Crude gained 0.4% to $94.1 per barrel.
Cyprus had agreed a bailout deal with the EU and the IMF last week.
However, the EU and IMF had asked Cyprus to raise 5.8 billion euros in order to secure the funds.
They had proposed that Cyprus impose a one-off levy on bank deposits in order to raise the cash, a move that triggered protests in Cyprus and resulted in savers rushing to ATM machines to withdraw their money – a move that brought fears of a run on the banks.
The Cyprus parliament rejected the proposal last week, delaying an agreement to secure the bailout funds.
According to the latest deal, all deposits under 100,000 euros will be “fully guaranteed”.
However, Laiki (Popular) Bank, the country’s second-biggest, will be wound down and holders of deposits of more than 100,000 euros will face big losses.
The levy on accounts in Laiki Bank could be as high as 40%, correspondents say.
Large deposits in the Bank of Cyprus, the country’s biggest bank, will also face a levy.
Jeroen Dijsselbloem, president of the Eurogroup of eurozone finance ministers, told a press conference in Brussels that the percentage to be levied on large deposits in the Bank of Cyprus will be decided in the coming weeks.
Analysts said that while the draft deal had helped ease market jitters, uncertainties surrounding its implementation were likely to hurt sentiment in the coming days.
Asian markets have risen, following gains on Wall Street, after the US Federal Reserve unveiled its latest stimulus plan.
The US central bank said it would buy $40 billion of mortgage debt a month and kept interest rates at below 0.25%.
It said it would also continue its programme to reduce long-term borrowing costs for firms and households.
Japan’s Nikkei 225 index rose 1.8%, South Korea’s Kospi gained 2.6% and Hong Kong’s Hang Seng added 2.5%.
This followed gains of 1.6% rise in the Dow Jones and S&P 500 indexes on Thursday.
Asian markets have risen, following gains on Wall Street, after the US Federal Reserve unveiled its latest stimulus plan
Investors are hoping the measures will revive growth in the US economy, the world’s biggest, and a key market for Asian exports.
“They’re saying that the punch bowl, the fuel for the economy, isn’t going away – it’s going to be here as long as you need it,” said Tony Fratto, managing partner at Hamilton Place Strategies, a policy consulting firm.
There have been growing fears about the global economy with a weak recovery in the US and the ongoing debt crisis in the eurozone.
The slowdown in China’s economy, the world’s second-largest, and one of its biggest drivers of growth after the global financial crisis, has fanned those fears.
Prompted by these concerns, policymakers in these regions have been taking measures to try to spur a fresh wave of growth.
The Federal Reserve’s announcement came days after the European Central Bank (ECB) announced its latest plan.
Last week, the ECB said that it would buy bonds from the bloc’s debt-ridden nations in an attempt to bring down their borrowing costs.
Meanwhile, China has cut its interest rates twice since June to bring down borrowing costs for businesses and consumers. Beijing has also lowered the amount of money that banks need to keep in reserve three times in the past few months to further encourage lending.
This week South Korea has also unveiled two stimulus measures aimed at boosting domestic demand and helping small businesses.
Analysts said the moves had helped reassure investors and markets that policymakers were doing all they could to ensure growth in the global economy.
“You’re witnessing global economic stimulus across the board,” said Quincy Krosby, a market strategist at Prudential Financial.
“The Fed’s actions are occurring in conjunction with the European Central Bank’s commitments to support the euro and amid talk that China could also deliver a stimulus package.”
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.