Asian shares fall as China currency weakens further
TOKYO — Asian stock markets fell Wednesday in spillover from the global sell-off spurred by China's move a day earlier to devalue its currency.
China's government said the move to weaken the yuan was part of reforms meant to make its exchange rate more market-oriented. But the decision accentuated worries over the health of the world's second-largest economy, pulling shares and prices of oil and other commodities sharply lower.
KEEPING SCORE: The Chinese yuan's market rate fell 1.6 percent after Tuesday's nearly 2 percent decline, which was the biggest drop in a decade. Japan's Nikkei 225 fell 1.2 percent to 20,476.65 and Hong Kong's Hang Seng dropped 1.3 percent to 24,186.92. South Korea's Kospi lost 1.2 percent to 1,963.62 and Australia's S&P/ASX 200 slipped 0.6 percent to 5,443.30. The Shanghai Composite Index fell 0.5 percent to 3906.74 and shares in Southeast Asia were also lower.
CHINA'S DEVALUATION: The International Monetary Fund welcomed Beijing's move toward more flexible exchange rates, but many investors saw it as an attempt to stimulate a slowing economy. A cheaper yuan will benefit China's exports by making them less expensive overseas. But the devaluation triggered selling of shares, oil and other commodities on expectations of weaker demand from China.
THE QUOTE: "Markets were not expecting any major moves on the currency from the Chinese government, despite its benefits, as the risks were perceived as too high. Now that this Rubicon has been crossed, keen attention should be paid to any other significant moves to prop up the Chinese economy," Angus Nicholson, a market analyst at IG, said in a commentary.
WALL STREET: The Standard & Poor's 500 fell 20.11 points, or 1 percent, to 2,084.07 on Tuesday. The Dow Jones industrial average lost 212.33 points, or 1.2 percent, to 17,402.84. The Nasdaq composite index fell 65.01 points, or 1.3 percent, to 5,036.79.
ENERGY: U.S. crude fell 5 cents to $43.03 a barrel in electronic trading on the New York Mercantile Exchange. It fell Tuesday to its lowest level in six years, losing $1.88 to $43.08 a barrel. OPEC's announcement that its production increased to a 3-year high was seen as further evidence of a global supply glut. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 36 cents to $48.82. It fell $1.23 to close at $49.18 in London.
CURRENCIES: The dollar rose to 125.22 yen from 125.18 yen in the previous trading session. The euro rose to $1.1057 from $1.1047.
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