SINGAPORE - Singapore stocks fell sharply after trading opened on Thursday (June 15),spooked by a report that US President Donald Trump is being investigated for possible obstruction of justice and an overnight plunge in crude prices.
Not helping were hawkish remarks on Wednesday by Federal Reserve chair Janet Yellen in contrast with soft US data and concerns over the latest Chinese retail sales and industrial production data.
Around 1.15pm, the Straits Times Index was trading 0.6 per cent lower, dragged down by banks. DBS Group fell 0.7 per cent, OCBC Bank was down 0.9 per cent while UOB Group shed 1.4 per cent.
Stocks were down 0.4 per cent in Tokyo, 1.3 per cent in Sydney, 1 per cent in Hong Kong, 0.1 per cent in Shanghai and 0.6 per cent in Seoul.
Oil held losses below US$45 a barrel after sliding nearly 4 per cent to the lowest in seven months overnight following US data showing an unexpectedly large weekly build in US gasoline inventories and International Energy Agency (IEA) data projecting a big increase in non-Opec output in 2018.
Although the Federal Reserve's rate rise was expected, Yellen's signal that the Fed would press ahead with plans to normalise monetary policy despite weak inflation hurt financial shares and exporters in Asia.
"The Fed interest rate hike has already been largely factored in. In fact, the Fed approved its second rate hike this year amid expectations that inflation is running well below the central bank's target," CMC Markets sales trader Jane Fu said.
That suggests the possibility of one more rate hike this year, signalling the Fed's hawkish stance.
Yellen's apparent optimism that the economy is continuing to strengthen was over-shadowed by surprisingly weak US economic data released before the rate announcement which showed US consumer prices unexpectedly falling in May and US retail sales dropping 0.3 per cent last month - the largest fall since January 2016 and way below economists' expectations for a 0.1 per cent gain.
Asian markets also opened to breaking news from the Washington Post that top intelligence officials will be questioned over allegations Trump tried to get the FBI to back away from a probe into former national security adviser Michael Flynn.
Also pressuring Asian stocks was Chinese data released on Wednesday.
"The China retail sales and industrial production data was only in line with expectations and not above expectations," Ms Fu added.
The pace of growth in China's retail sales and industrial output was unchanged in May, while property investment growth softened signaling a slowdown in overall activity in the second quarter.
