Asian markets dropped early Wednesday following big drops in the U.S. market and persistent concerns about the strength of China's economy.

In recent weeks, stocks, currencies and commodities have dropped dramatically on signs of a slowdown in Chinese growth. Disappointing economic data out of China Tuesday triggered more selling after Beijing's devaluation of its currency and a sharp selloff in the Shanghai stock market, fueling concerns around the globe.

"There are some pretty dark clouds at the moment," said Chris Weston, Australia-based chief market strategist at brokerage IG. "People should be thinking about going into cash or going short."

On Wednesday, South Korea's Kospi was down 1.4%, the Nikkei Stock Average was down 1.1% and S&P ASX 200 was down 0.4%.

China's stock market has fallen 2% this week in the lead-up to a parade Thursday in Beijing to celebrate the 70th anniversary of the end of World War II. Analysts say government-backed funds have been trying to prop up the market in recent days ahead of the event.

The Shanghai Composite Index fell 1.2% Tuesday. China markets will be closed Thursday and Friday for national holiday.

On Wednesday, the region extended its slump after U.S. stocks tumbled overnight. The Dow Jones Industrial Average lost 2.8% while the S&P 500 declined 3%.

For the year, the Dow Jones Industrial Average is down 9.9%.

The region's markets pared losses slightly as U.S. stock futures turned positive. S&P 500 stock futures were last up 0.6%. U.S. markets will be closed next Monday for Labor Day.

Gold, a safe haven asset, slipped 0.1% to $1,138.50 a troy ounce in Asia trade.

In Australia, investors expect economic data for the second quarter later today. Despite growing concerns over the country's economy at the end of a long mining-investment boom, economists on average expect GDP to have grown by 0.4% in the second quarter. Official data will be released at 0130 GMT.

CMC Markets chief market analyst Ric Spooner said the data could pressure the Australia market further given that it comes at a time of heightened nervousness.

Meanwhile, Asian currencies were mixed. The Malaysian ringgit weakened 0.6% to trade at 4.19 against the U.S. dollar from its level late in Asia on Tuesday. The ringgit has been the worst hit among Asian emerging market currencies this year, as lower commodity prices and weaker demand from China hurt Malaysian exports.

The Japanese yen weakened 0.5% to trade at 120.04 against the U.S. dollar. A weaker yen usually bodes well for Japanese stocks as Japanese exports benefit from lower costs at home, but Hideyuki Ishiguro, senior strategist at Okasan Securities, said worries about China and the U.S. Federal Reserve rate decision later this year were driving selling.

"Nothing really has changed since last week. There is still uncertainty over the Fed's rate increase and mistrust for China," he said.

The Korean won strengthened by 0.2% against the U.S. dollar.

Brent crude oil, which had rallied in recent days, slumped 1.9% to $48.64 in early Asia trade Wednesday. U.S. oil prices fell 7.7% overnight.

On Tuesday, China's official manufacturing purchasing managers index for August fell to its lowest level in three years, corroborating earlier indications of a slowdown from a gauge on manufacturing activity. A separate reading on manufacturing by Caixin Media Co. and research firm Markit Ltd. fell to a more than six-year low.

Robb M. Stewart contributed to this article.

Write to Chao Deng at Chao.Deng@wsj.com

 

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(END) Dow Jones Newswires

September 01, 2015 22:15 ET (02:15 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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