Asian stocks went down on September 14 post China reporting a weak factory output. The US dollar was weak against major currencies as investors consider a rise in the interest rates in Federal Reserve meeting scheduled this week.
There was a drop of 1.3 percent in the Tokyo Nikkei 225 falling to 18,028.38. The Shanghai Composite Index dropped to 3,114.38, a loss of 2.6 percent. Kospi of South Korea shaved off 0.6 percent to go down to 1,929.81. Hang Seng of Hong Kong went up to 21,550.66, an upside of 0.2 percent, after a choppy trend involving a traverse into the red. The Taiwanese index remained almost unchanged. Southeast Asian markets exhibited a mixed trend. These was a rise of 0.7 percent in the Australian S&P/ASX 200 to 5,104.40.
The Yen went up with the euro, pushing the Bloomberg Dollar Spot Index to three week lows, with economists and traders divided on the action of the Federal Reserve. They are uncertain about whether Fed will increase borrowing costs for first time from 2006. The MSCI Asian Pacific Index fell too.
When it comes to manufacturing in China, Factory output increased by only 6.1 percent in August, pushing expectations that the Chinese government will initiate new stimulus measures to combat its cooling economy. There was lukewarm growth much below what was estimated. Exports during August dropped 5.5 percent. According to UBS reports, the recent data cast doubts about the base strength of Chinese industrial activity.
When it came to the US, traders focused on the decision to be taken by the Federal Reserve on September 17, where there is a strong possibility of the interest rates being raised. The Fed could also exercise its option of holding for the time being and signaling their wish for tightening the credit access. A few analysts have suggested that the economic weakening of China and US inflation uncertainty could force the Fed to hold off its action for another day. However, Stanley Fisher, the Deputy Chairman of the Federal Reserve, said about two weeks before that there is a convincing case for increasing the rates in September.
Japan also reviewed its monetary policy during the second week of September. The nation's struggling economy has led many economists to hold the view that the central bank will relax its measures in October. A few expect such movements in September itself.