Asia Shares Decline Following Hawkish Fed Comments

Asia Shares Decline Following Hawkish Fed Comments

Asian equity markets declined on Friday following hawkish comments from a Federal Reserve official.

Speaking in a televised interview in the U.S. overnight, St. Louis Fed President James Bullard suggested interest rates could rise sooner rather than later, leading Wall Street shares to end in the red overnight.

"Given Janet Yellen's last comments highlighted 'noise' in the inflation reading, these comments [from Bullard] have some significance. In fact, most of the Fed comments this week have been quite hawkish and perhaps this resulted in the subdued performance in equities," said Stan Shamu, market strategist at IG in a note.

Also weighing on sentiment was data showing that U.S. consumer spending rose less than expected in May, which led many economists to pare back growth forecasts for the second quarter.

Kospi Drops 0.2%

Nikkei slips 0.6%

Japanese shares fell to a new one-week low despite data showing that May core consumer prices rose at their fastest pace since 1982. A stronger yen was to blame for the weaker sentiment as the currency hit a near one-month low of 101.47 per dollar.

Retailers declined after other data released before the market open showed retail sales slipping 0.4 percent on year. Seven & I eased 0.3 percent while Fast Retailing dipped 0.6 percent.

Engineering companies rose after Toyota Motor said earlier this week that it will begin selling hydrogen fuel cell electric vehicles this fiscal year. Hydrogen station maker Mitsubishi Kakoki Kaisha rallied as much as 14 percent.

Shanghai down 0.4%

Sentiment in mainland shares fell after Chinese investigators discovered $15 billion in gold-backed loans on Thursday that could be fraudulent. The findings come after authorities suspected improper loans backed by copper and aluminum at the ports of Qingdao and Penglai.

Steel firms led the gains on the Shanghai Composite, with Baotou Steel rallying 2 percent and Baoshan Steel up 1.7 percent.

Hong Kong-listed Standard Chartered dropped nearly 4 percent after warning that profits would fall for the second straight year this year.

ASX 0.2% lower

Australia's benchmark S&P ASX 200 index erased gains after climbing to its highest level in over two weeks at 5,480 points after the Reserve Bank of Australia's assistant governor said there were no signs of a speculative credit bubble in domestic house prices.

Miners rose after iron ore prices rose to above $95 a ton, recovering from last week's 21-month low. Fortescue Metals rose over 2 percent while BC Iron added 1 percent.

Kospi down 0.2%

South Korean shares retreated after ending at its highest levels in over a week on Thursday as data showing May industrial output came in well below market expectations darkened the mood. But while won rallied to a fresh six-year high against the dollar at 1,013.7.

Blue-chip stocks led the losses with index heavyweight Samsung Electronics down 1 percent.


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