BANGKOK (AP) — Expectations that the U.S. Federal Reserve will start to phase out its monetary stimulus had a mostly negative impact on Asian stock markets Friday.
A fall in weekly U.S. jobless claims to a near six-year low Thursday reinforced views that the economy is strong enough to withstand having less extraordinary support from the Fed. The Labor Department reported that weekly claims slid 15,000 last week to 320,000, the lowest level since October 2007.
Analysts said the sharp fall makes it more likely that the Fed will scale back its $85 billion-a-month purchases of government bonds in September. The purchases have helped lower interest rates to spur borrowing and economic growth after the global financial crisis of 2008 sparked a recession.
The stimulus program has been a boon to stocks, into which investors have plowed money in search of investment returns that outpace bonds. Traders have come to view a withdrawal of the Fed program as a negative for stocks even in the face of evidence that the U.S. economy is improving.
Japan’s Nikkei 225 index fell 0.4 percent to 13,698.69. Australia’s S&P/ASX 200 lost 0.8 percent to 5,111.10. Benchmarks in the Philippines, New Zealand, Indonesia, Singapore and Thailand also fell.
Hong Kong’s Hang Seng swung between gains and losses and was marginally lower by midday at 22,519.31.
Mainland Chinese shares surged. The Shanghai Composite Index rose a sharp 5 percent before settling later with a 3.2 percent gain to 2,148.39. The smaller Shenzhen Composite Index gained 1.3 percent to 1,013.60. Taiwanese shares also rose.
Analysts said the movement toward Chinese stocks reflected a diversion of funds toward China from the U.S. While the Fed is expected to tighten its monetary policy, traders suspect China’s central bankers might go the other way.
“We have seen some funds coming back to Hong Kong and China,” said Kwong Man Bun, chief operating officer at KGI Securities in Hong Kong. “I suspect some funds believe the U.S. stock market is peaking in the short term. The build to the upside will be relatively small, and that is why they switch to markets that are lagging behind, such as Hong Kong and China.”
Elsewhere, South Korea’s Kospi fell slightly to 1,922.51. South Korean companies that operated various projects in North Korea gained ground Friday after the two Koreas agreed to work toward reopening a jointly run factory park in the North. Hyundai Merchant Marine Co., the largest shareholder in Hyundai Asan Corp., the developer of the Kaesong industrial complex in North Korea, jumped 7.8 percent.
Negative corporate news out of the U.S. also led to frayed nerves. Wal-Mart, the world’s largest retailer, cut its profit and revenue forecasts for 2013. It also reported second-quarter results that missed Wall Street’s estimates.
Cisco Systems announced plans to cut 5 percent of its workforce, roughly 4,000 employees, as sales slow. Cisco’s announcement led to selling in other technology stocks because the company is regarded as a bellwether for the industry.
The Dow Jones industrial average fell 225 points, or 1.5 percent, to 15,112.19 — its worst day in nearly two months. The Standard & Poor’s 500 index dropped 1.4 percent, to 1,661.32. The Nasdaq composite fell 1.7 percent, to 3,606.12.
Benchmark oil for September delivery was up 6 cents to $107.39 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 48 cents to $107.33 late Thursday in New York.
In currencies, the euro fell slightly to $1.3342 from $1.3349 late Thursday. The dollar rose to 97.70 yen from 97.07 yen.
AP Business Writer Youkyung Lee contributed from Seoul.