Asian Shares Fall Ahead of Yellen's Speech
August 25 2016 - 11:30PM
Dow Jones News
Shares in Asia drifted lower Friday, as investors largely held
fire ahead of guidance from U.S. Federal Reserve Chairwoman Janet
Yellen.
The S&P/ASX 200 slipped 0.1% and South Korea's Kospi dropped
0.4%, but Hong Kong's Hang Seng Index gained 0.6%. The Shanghai
Composite traded higher by 0.1%.
Ms. Yellen is speaking later in the global trading day at the
Jackson Hole gathering of central bankers.
In Japan, the Nikkei Stock Average was down 0.9%, with
automobile and insurance stocks hurt by expectations that Ms.
Yellen would deliver gloomy news about the U.S. economy. That would
push down bond yields and weaken the dollar.
Lower yields reduce insurers' returns. A weaker dollar pushes
the yen higher, hurting export competitiveness.
Toyota Motor was down 3%, Honda Motor fell 2.5% and Nissan Motor
slid 1%.
A December rate increase is more likely, said Hisao Matsuura,
Chief Strategist at Nomura Japan's Equity Strategy Team. Chicago
Mercantile Exchange data on Fed Fund futures show the market
pricing in a 44% probability of a quarter of a percentage point
rise in December.
"I hope that August non-farm pay roll [data] would be more
important rather than Jackson Hole," Mr. Matsuura said, adding that
he expects the Fed to take a call on interest rates depending on
economic data.
Japan's Core Consumer Price Index--which excludes fresh
food--slid 0.5% from a year earlier in July, following a revised
0.4% drop in June. That was greater than a 0.4% fall forecast by
The Wall Street Journal and the Nikkei.
Accommodation and gasoline led price declines, weighing on the
index, data showed.
This prompted speculation that the Bank of Japan may have to
lurch back into action, to reignite inflation in the world's
third-largest economy.
But it is possible to put a positive spin on events--Japanese
consumer confidence may be rising as prices fall and wages inch
higher. Renewed confidence might eventually be good for Japan's
reflation project, say analysts.
"In Abenomics since 2013, price rises preceded wage increases,
so households couldn't feel the economic recovery, however finally
a rise in real wages should improve their feeling," said Societe
Generale economist Takuji Aida.
Eleanor Warnock, Kosaku Narioka and Gregor Stuart Hunter
contributed to this article.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
August 25, 2016 23:15 ET (03:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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