Asia shares fall on growth and tapering fears, dollar holds firm

The Hang Seng Tech Index fell 2.44 per cent in early trading. PHOTO: AFP

HONG KONG (REUTERS) - Asian shares dropped on Thursday (Sept 9), while the dollar held firm, in line with a cautious global mood as investors worried about the combination of slowing global growth and the potential tapering of central bank stimulus.

The European Central Bank is particularly in focus, with analysts expecting it to announce a token step towards reducing its emergency economic support later on Thursday.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.04 per cent while Japan's Nikkei dropped 0.38 per cent.

There were losses in Australia down 1.01 per cent, South Korea off 0.74 per cent, and in Hong Kong which shed 1.17 per cent, with tech names leading the declines there.

The Hang Seng Tech Index fell 2.44 per cent in early trading, weighed by declines in Tencent Holdings down 3.7 per cent and Netease Inc down over 7 per cent after China's government on Wednesday summoned gaming firms to ensure they implement new rules for the sector.

Chinese blue chips were down 0.41 per cent just after the bell, and U.S. stock futures, the S&P 500 e-minis, were down 0.16 per cent.

But in Singapore, the Straits Times Index was up 0.3 per cent at 9.56am local time.

Edison Pun, a senior market analyst at Saxo Markets, attributed the bearish global turn to strong U.S. job openings data overnight, which "means the job market is still strong, and that could mean tapering may still start in (the fourth quarter) despite the poor non-farm payroll in August," he said.

Earlier this week, investors had bet the lower-than-expected payroll reading from Friday would mean the Federal Reserve would delay trimming its massive asset purchases, sending MSCI's world equity index to a new all time on Tuesday.

However, the mood has turned more cautious since then, and several Fed policymakers on Wednesday signalled the U.S. central bank remains on track to reduce asset purchases this year.

On Wall Street on Wednesday, the Dow Jones Industrial Average fell 0.2 per cent, the S&P 500 lost 0.13 per cent and the Nasdaq Composite dropped 0.57 per cent.

Following its meeting on Thursday, analysts expect the ECB to announce a cut to the pace of its emergency bond purchases from next quarter but will keep buying bonds at least until 2024 under its main programme, and possibly much longer.

Ahead of the decision, the euro slipped to US$1.1814, a little off Friday's two-month high of US$1.1909, while the dollar was steady against a basket of its peers, having gained in the previous three sessions.

Benchmark 10-year Treasury notes yielded 1.3376 per cent, little changed in Asian hours, having edged lower on Wednesday after a strong auction by the U.S. Treasury.

Oil prices ticked lower, giving up some of last session's gains although a slow recovery in production in the U.S. Gulf of Mexico output following Hurricane Ida offered some support.

U.S. crude dipped 0.1 per cent to US$69.23 a barrel. Brent crude fell 0.11 per cent to US$72.55 per barrel.

Gold dropped slightly, languishing near two-week lows with the spot price at US$1,787.67 per ounce off 0.09 per cent.

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