Asia stocks mostly lower; Nikkei tumbles 2.6% as yen halts slide

Investing.com - Asian stock markets were mostly lower during late Asian trade on Wednesday, with shares in Japan falling sharply as the yen halted its slide against the U.S. dollar, while concerns over further budgetary battles facing the U.S. came into focus.

During late Asian trade, Hong Kong's Hang Seng Index declined 0.5%, Australia’s ASX/200 Index settled 0.5% higher, while Japan’s Nikkei 225 Index ended down 2.6%, the biggest daily loss in eight months.

In Tokyo, the Nikkei fell from the previous session’s 32-month closing high, as the yen firmed against the U.S. dollar and the euro after Economy Minister Akira Amari said on Tuesday that an excessively weak yen could have a negative impact on the economy by pushing up import prices.

The greenback weakened to 87.93 against the yen, retreating further from last week’s 31-month high of 89.66. A stronger yen reduces the value of overseas income at Japanese companies when repatriated, dampening the outlook for export earnings.

The news prompted investors to take profits on recent outperformers. The benchmark index has rallied nearly 20% since mid-November, as expectations for more aggressive monetary stimulus from the Bank of Japan under new Prime Minister Shinzo Abe underpinned sentiment.

Japanese exporters have been amongst the most notable gainers in recent weeks, as ongoing weakness in the yen boosted the outlook for export earnings.

Automakers Mazda and Nissan lost 3.8% and 3.4% respectively, electronics maker Sony fell 2.6%, while industrial robot maker Fanuc dropped 4.3%.

Index heavyweight Fast Retailing saw shares fall 4.6% after Goldman Sachs downgraded the stock to ‘neutral’ from ‘buy’, citing the view that the company’s earnings forecast has now largely been priced in.

Meanwhile, in Hong Kong, the Hang Seng edged lower as investors took to the sidelines ahead of the release of key Chinese economic data later in the week.

The Asian nation is slated to release data on fourth quarter gross domestic product on Friday, along with reports on industrial production and retail sales.

The China banking and insurance sector were the biggest drags on the index, as traders booked profits on recent gains. China Life Insurance Group shares fell 1.5%, Ping An Insurance Group declined 1%, while Industrial and Commercial Bank of China and Bank of China retreated 1% and 1.1% respectively.

Elsewhere, in Australia, the benchmark ASX/200 Index inched up as financials put in a strong performance. The nation’s big four banks all rose, with top lender, the Commonwealth Bank of Australia gaining the most, up 0.9%.

Construction materials maker Boral rallied 10% after announcing it was cutting 700 jobs as part of a company-wide restructure aimed at reducing costs.

Looking ahead, European stock market futures pointed to a lower open. The EURO STOXX 50 futures pointed to a loss of 0.6% at the open, France’s CAC 40 futures shed 0.5%, London’s FTSE 100 futures eased down 0.4%, while Germany's DAX futures pointed to a drop of 0.4% at the open.  

Later Wednesday both the euro zone and the U.S. were to release official data on consumer inflation, while Germany was to hold an auction of 10-year government bonds.