Asia-Pacific Shares Down Across the Board; Hong Kong’s Hang Seng Falls Nearly 2% on Weaker Tech Shares

The major Asia-Pacific stock indexes were down across the board on Friday with some of the selling fueled by the strengthening U.S. Dollar as the markets prepare for the gradual reduction of monetary stimulus from the Federal Reserve.

Conditions are expected to remain volatile into next week as investors await clarity from the Fed at the Jackson Hole Central Bankers’ Summit and maybe well into next month with the U.S. central bank not scheduled to meet until September 21-22.

At the close on Friday, Japan’s Nikkei 225 Index settled at 27013.25, down 267.92, down 0.98%, Hong Kong’s Hang Seng Index finished at 24857.44, down 458.89 or -1.81% and South Korean’s KOSPI Index closed at 3060.51, down 37.32 or -1.20%.

In China, the Shanghai Index settled at 3427.33, down 38.22 or -1.10% and in Australia, the S&P/ASX 200 Index finished at 7460.90, down 3.70 or -0.05%.

The U.S. Federal Reserve will hold its annual research conference in Jackson Hole, Wyoming, August 26-28. Federal Reserve Chairman Jerome Powell is due to give a speech that will be scoured for clues on the central bank’s next steps, according to Reuters.

China Leaves Benchmark Interest Rate Unchanged, as Expected

China left its benchmark interest rate unchanged on Friday for the 16^th consecutive month but that did little to dampen expectations authorities will boost stimulus to counter a slowdown in the world’s second-largest economy.

China kept the one-year loan prime rate at 3.85% and five-year LPR at 4.65%. About 78% of traders and analysts polled by Reuters had predicted no change in either rate, but a minority had penciled in a cut to the one-year tenor.

South Korean Stocks Clock Worst Week in Seven Months on Virus, Fed Taper Fears

South Korean shares tumbled more than 1% on Friday and posted their worst weekly decline in seven months, underpinned by persistent worries over the Delta coronavirus variant and prospects of an early tapering by the U.S. Federal Reserve.

The benchmark KOSPI Index posted its lowest close since March 29. It declined 3.49% on a weekly basis, the worst since late January, and after falling 3.03% in the previous week.

Nikkei Falls to 8-Month Low as Toyota Drags Peers, Materials Makers

Japan’s Nikkei stock average closed at a near eight-month low on Friday, dragged down by automakers and their related sectors on growing concerns about a recovery after Toyota cut its global production. For the week, the benchmark Nikkei shed 3.4%, the biggest weekly loss since mid-May.

“Toyota triggered declines in the Nikkei. Today many other shares surrounding Toyota were affected,” said Kentaro Hayashi, senior strategist at Daiwa Securities.

“Toyota’s output cut almost crashed hopes of an economic recovery from the pandemic low.”

Toyota Motor said on Thursday it would slash global production for September by 40% from its previous plan.