Asia: Stocks fall after sharp Wall Street losses

[HONG KONG] Asian stocks continued to slide Wednesday, tracking further sharp declines on Wall Street as traders studied US President Donald Trump's call for infrastructure investment in his State of the Union address.

It has been an upbeat January for equities, but Asian investors have reined in buying this week, locking in profits as the month ends and ahead of a slew of key earnings reports and policy announcements.

Following two days of losses, major regional bourses edged down again Wednesday, the decline compounded by weak Chinese manufacturing data.

China factory figures for January came in below expectations, hampered by crackdowns on debt and pollution levels.

Shanghai fell 0.7 per cent in morning trade, as did Hong Kong.

They tracked tumbling Wall Street stocks, where the Dow posted its largest decline since May on Tuesday.

Traders were closely studying Trump's major speech Wednesday, in particular his call for a US$1.5 trillion investment plan to renew the country's creaking transport infrastructure.

Markets hope the spending plan could provide a stimulus to the world's largest economy.

But US stocks are under pressure from a spike in Treasury bond yields, ahead of a Federal Reserve policy announcement tonight that could signal an acceleration in interest rate increases this year.

FED 'BECOMES MORE HAWKISH'

"Rising bond yields head investors' fear as the possibility of interest rates rising quicker than expected has stoked concerns of an extended equities market purge," said Stephen Innes, head of Asia-Pacific trading at Oanda.

Greg McKenna, chief market strategist at AxiTrader, added of the Fed meeting: "No one expects a change in rates but whether, and by how much, the Fed becomes a little more hawkish given US economic strength will be the key thing traders will be looking for in the statement that accompanies the decision."

In Japan, there was some positive news as Samsung Electronics reported a 73 per cent jump in its fourth quarter net profit.

The flagship subsidiary of the giant Samsung Group set a record for any three-month period, mainly driven by demand for its memory chips and display panels.

Japan's factory output also rose more than expected in December, as production of automobile-related parts and other machines expanded, data showed.

However, the positive outlook was overshadowed by overall global bearish sentiment.

"In these circumstances, the gravitational pull of a steep departure from trend growth has produced the most significant decline in US markets for some time. This will flow through to a weak opening on the local market this morning," said Ric Spooner, Sydney-based analyst at CMC Markets.

Tokyo was down 0.1 per cent at the break.

AFP