Asian stocks dip on stimulus concerns, Europe jitters; Nikkei down 1.65%

Investing.com - Asian stocks fell on Wednesday after a Federal Reserve official questioned the effectiveness of monetary stimulus measures.

Ongoing concerns that Europe will see fresh hurdles on its way out of its debt crisis pushed stocks down as well.

During Asian trading on Wednesday, Hong Kong's Hang Seng Index was down 0.90%, Australia's S&P/ASX200 was down 0.46%, while Japan’s Nikkei 225 Index was down 1.65%.

Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won't work in that households and businesses would rather pay down debts than take on new leverage.

Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing, sending stocks up in the process.

"And as far as households are concerned, they continue to try to repair their balance sheets in the wake of substantial losses of housing wealth, as I indicated earlier. They are deleveraging and saving more. It seems unlikely that a small drop in interest rates will overturn the strong desire to save and, instead, induce households to spend more," Plosser said in a speech earlier, according to prepared remarks from his presentation.

"Thus, in my view, we are unlikely to see much benefit to growth or to employment from further asset purchases. If I am right, then conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility," Plosser added.

"This is quite costly: If the public loses confidence in the central bank, our ability to set effective monetary policy in the future will be harmed and households and businesses will feel the consequences."

Equities investors sold on Plosser's comments as well on global growth concerns, largely ignoring bullish U.S. housing data.

The Standard & Poor’s/Case Shiller House Price Index showed that home price in 20 cities rose 1.2% in July of this year compared with the same month a year ago.

Analysts had expected the closely watched gauge on home prices to rise 1.0% in July.

Elsewhere, the Conference Board, an industry group, reported that its consumer confidence index rose to 70.3 in September from an upwardly revised 61.3 in August.

September's reading was the highest since February and outpacing analysts' calls for a 63.0 reading.

Talk that lawyers in Germany are examining the legality of the European Central Bank's bond purchasing program fueled concerns as well.

Doubt surrounding Spain's plans to seek bailout financing sent stocks falling further.

In Hong Kong, top decliners included Li & Fung, down 2.42%, CHALCO, down 2.16%, and CITIC Pacific, down 2.13%.

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In Australia, top decliners included Lynas Corp., down 5.66%, Mount Gibson Iron, down 5.06%, and Ramelius Resources, down 4.55%.

European stock futures indicated a higher opening.

France's CAC 40 futures pointed to a gain of 0.16%, while Germany's DAX 30 futures pointed to a gain of 0.23%. Meanwhile in the U.K., FTSE 100 futures indicated a gain of 0.11%.

Dow Jones Industrial Average futures pointed to a gain of 0.09% while the S&P 500 futures were up 0.08%.

Later Wednesday, Germany will publish preliminary consumer price index data.
In the U.S., official data on new home sales will publish as will the government's latest data on crude oil stockpiles.