Asia stocks drop on S&P move, EU in focus; Nikkei down 0.5%

Investing.com – Asian stock markets fell on Wednesday, after ratings agency Standard & Poor’s cut credit ratings for major global lenders, while markets continued to eye developments out of the euro zone.

During late Asian trade, Hong Kong's Hang Seng Index tumbled 1.5%, Australia’s ASX/200 Index shed 0.45%, while Japan’s Nikkei 225 Index declined 0.5%.

Shares in major Asian lenders performed poorly, tracking losses in their U.S. counterparts after ratings agency Standard & Poor’s downgraded its ratings on 15 global banks on Tuesday.

Shares in Japan’s largest lender Mitsubishi UFJ Financial Group slumped 1.4%, rival Sumitomo Mitsui Financial Group saw shares fall 1.1%, while the nation’s third biggest bank Mizuho Financial Group dropped 1.35%. All three had their credit ratings cut.

Meanwhile, euro zone finance ministers announced late Tuesday that they had agreed on terms for options to expand the European Financial Stability Facility, but said its capacity to assist indebted nations would not be as large as initially hoped. The ministers also agreed to release the sixth tranche of aid to Greece.

Shares in Japanese exporters with high exposure to Europe declined, amid the uncertain outlook. Consumer electronics giant Sony saw shares fall 1.45%, chip maker Elpida Memory tumbled 5.65%, while Toyota saw shares retreat 0.95%.

Elsewhere, in Hong Kong, shares in lenders led markets lower, with Industrial and Commercial Bank of China shares dropping 2.3% and Hong Kong-listed shares of Europe’s biggest bank HSBC Holdings falling 2.25% after S&P cut ratings on both lenders.

Elsewhere in the sector, China Construction Bank shares declined 0.95%, despite having its ratings upgraded to A from A- by S&P.

Raw material producers also contributed to losses, tracking commodity prices higher. Jiangxi Copper Company saw shares tumble 4.15%, Aluminum Corporation of China shares fell 3.25%, while gold producer Zijin Mining Group slumped 1.8%.  

Meanwhile, the outlook for European stock markets was downbeat. The EURO STOXX 50 futures pointed to a loss of 1.35%, France’s CAC 40 futures fell 1.3%, the FTSE 100 futures declined 1%, while Germany's DAX futures dropped 1.3%.

Later in the day, Germany was to publish official data on employment change, while the wider euro zone was to release data on inflation and unemployment. Meanwhile, European Union finance ministers were to meet in Brussels to discuss the ongoing financial crisis in the region.

Also Wednesday, the U.S. was to release a closely watched report on non-farm payrolls compiled by payroll processing firm ADP, as well as data on manufacturing activity in the Chicago area and pending home sales.