Asian shares lower after Fed official’s taper talk

Money traders at a foreign exchange dealing company in Tokyo work as screens indicate the US dollar, center, and euro, left, are traded higher against the Japanese yen Tuesday, Dec. 10, 2013. Asian stock markets were muted Tuesday amid some profit taking and ahead of Chinese data on industrial production and retail sales. AP PHOTO/KOJI SASAHARA

HONG KONG—Asian markets fell on Tuesday after a top official at the US Federal Reserve said the bank might announce a small cut in its stimulus program next week.

With a string of upbeat US data pointing to a pick-up in the economy and boosting confidence, the Japanese yen— considered a haven during uncertainty—came under pressure against the dollar and euro as investors seek out higher-yielding, “riskier” assets.

Tokyo eased 0.25 percent, or 38.90 points, to 15,611.31, Sydney was almost unchanged, edging down 0.8 points to 5,143.6 and Seoul gave up 0.35 percent, or 6.93 points, to end at 1,993.45.

Shanghai closed flat, edging down 0.71 points to 2,237.49 while Hong Kong lost 0.28 percent, or 66.98 points, to end at 23,744.19 after China released a mixed set of data showing growth in industrial output slowing while retail sales picked up speed.

James Bullard, the president of the Fed’s St. Louis branch, said Monday that “a small taper” of the bank’s $85 billion a month bond-buying scheme could be on the cards at its December 17-18 policy meeting.

He said “the probability of a reduction in the pace of asset purchases has increased” with evidence of accelerating job gains and the likelihood those advances will continue.

His comments came after the government last week said the unemployment rate had slipped to 7.0 percent in November from 7.3 percent in October, while a healthy 203,000 jobs were created—more than expected.

Days earlier Washington said the economy grew 3.6 percent in the July-September quarter, well above the 3.0 percent predicted by analysts.

The positive numbers have spurred expectations of a “taper” to the stimulus after the Fed had indicated on several occasions it would only do so when the economy showed it was strong enough to stand on its own two feet.

In New York the Dow edged up 0.03 percent, the S&P 500 advanced 0.18 percent to a new record high and the Nasdaq added 0.15 percent.

However, Kengo Suzuki, forex strategist at Mizuho Securities, said: “It’s still hard to tell when the Fed may begin its roll-back.”

He added that he still only saw a small chance of the Fed trimming its measures beginning in December. “I’d say there’s a 10 percent chance the Fed will begin tapering in December, a 50 percent chance it will do so in January and a 40 percent chance in March.”

The brighter outlook in the US economy, along with strong Chinese trade data at the weekend, has boosted confidence, which in turn has pushed the dollar and euro higher.

The dollar bought 103.10 yen in afternoon Tokyo trade, compared with 103.28 yen in New York Monday and hovering just below its five-year highs.

The euro sat at $1.3749 against $1.3737. It also fetched 141.90 yen from 141.89 yen—levels not seen since late 2008.

On oil markets, New York’s main contract, West Texas Intermediate for January delivery, was up 42 cents at $97.76 a barrel in afternoon trade, while Brent North Sea crude for January rose 31 cents to $109.70.

Gold fetched $1,247.49 per ounce at 0820 GMT compared with $1,228.36 on Monday.

In other markets:

— Taipei was flat, edging down 1.23 points to 8,443.39.

Taiwan Semiconductor Manufacturing Co. was 0.95 percent lower at Tw$104.0 while Hon Hai Precision rose 0.38 percent to Tw$79.9.

— Wellington fell 0.25 percent, or 11.80 points, to 4,706.51.

Air New Zealand was down 0.61 percent at NZ$1.62 and Telecom slipped 1.72 percent to NZ$2.29.

— Manila gave up 2.04 percent, or 122.54 points, to finish at 5,886.40.

Ayala Corp. tumbled 3.65 percent to 555 pesos and Bank of the Philippine Islands slipped 2.25 percent to 88.95 pesos

— Jakarta closed up 1.46 percent, or 61.34 points, at 4275.68.

State miner Aneka Tambang gained 1.61 percent to 1,260 rupiah, while Bank Permata fell 0.78 percent to 1,280 rupiah.

— Singapore closed down 1.03 percent, or 31.92 points, at 3,081.72.

Singapore Telecom dipped 1.66 percent to Sg$3.56 while real estate developer Capitaland was down 1.33 percent at Sg$2.97.

— Kuala Lumpur gained 0.11 percent, or 1.98 points, to 1,843.85.

Telekom Malaysia added 2.4 percent to 5.60 ringgit, while SapuraKencana Petroleum inched up 0.2 percent to 4.48.

— Bangkok was shut for a public holiday.

— Mumbai fell 0.33 percent or 71.16 points to 21,255.36.

State-run NTPC fell 11.26 percent to 136 rupees while Torrent Power fell 4.83 percent to 121.25 rupees.