By Chao Deng
Stocks across Asia fell Wednesday with heightened expectations
that the U.S. is headed for a rise in interest rates after comments
from a Federal Reserve board member.
The Shanghai Composite Index opened 0.3% lower at 3745.65 and
the smaller Shenzhen Composite fell 0.1% to 2148.78.
Despite gaining 3.7% Tuesday, after Chinese authorities late
Monday moved to clamp down on short selling, the Shanghai index is
still off more than a quarter from its June high. The new
short-selling rules require investors to wait at least one day to
cover their positions and pay back loans used to buy shares. When
shorting a stock, investors sell borrowed shares on the belief they
can buy them back at a lower price later, pocketing the
difference.
Australia's S&P ASX 200 was down 0.7%, Japan's Nikkei Stock
Average was down 0.2% and South Korea's Kospi lost 0.1%, following
U.S. stocks' slide Tuesday after Federal Reserve Bank of Atlanta
President Dennis Lockhart said the economy is ripe for a rise in
short-term interest rates. The Fed's easy-money policies after the
global financial crisis, broadly mirrored by global central banks,
have helped fuel stock rallies.
"Investors are looking for clues to the U.S. central bank's rate
hike timing," said Shun Otsuka, general manager of research and
strategy at Ichiyoshi Asset Management, adding that markets will be
watching monthly jobs data, set for release on Friday. Investors
have been parsing economic data, from inflation to wages, for clues
about when the Fed might raise rates.
Midway through Japan's earnings season, investors also are
monitoring which companies might announce share buybacks to
increase the appeal of shareholder returns, added Mr. Otsuka. He
noted that the scale of buybacks in terms of share value is already
at a seven-year high.
Late Tuesday in Washington, officials at the International
Monetary Fund said China will likely have to move ahead with market
liberalization before it labels the country's yuan a reserve
currency, signaling a decision could be pushed into next year.
The U.S. dollar traded as high as 6.2220 against the Chinese
yuan, from 6.2180 late Tuesday in Asia. The closely managed yuan
has been stable in recent months, despite volatility in China's
stock market, but markets expect it to weaken.
The Australian dollar, which had fallen near six-year lows
earlier this week, strengthened after the central bank kept
interest rates steady Tuesday and unexpectedly dropped its usual
rhetoric about the need for further currency depreciation. The
currency last traded at $0.7372, giving up gains after trading as
high as $0.7428 yesterday.
"The market was completely caught off guard because, given the
weakness in the Chinese economy and the decline in commodity
prices, everyone thought that not only would Australian data be
weak but the Reserve Bank would grow increasingly dovish," said
Kathy Lien, managing director at BK Asset Management in New
York.
Oil prices rose in U.S. trading overnight on expectations
inventory data due Wednesday would show U.S. crude-oil supplies
fell last week, although prices remain near multi-month lows. In
Asia trade, futures for Brent crude were up 0.2% at $50.09.
Gold is down 0.6% to $1,084.20 in Asian trade.
Bradford Frischkorn and Vera Sprothen contributed to this
article.
Write to Chao Deng at Chao.Deng@wsj.com