Asia stocks plunge on Yellen comments; Nikkei ends down 1.7%

Asian stock markets tumbled on Thursday, following the Federal Reserve’s decision to taper its monthly bond-buying program by $10 billion for the third consecutive meeting and amid indications a rate hike from the central bank could come sooner than expected.

Asia stocks sell off after Yellen rate hike comments

During late Asian trade, Hong Kong's Hang Seng Index dropped 1.85%, China’s Shanghai Composite Index lost 1.4%, Australia’s ASX/200 Index closed 1.15% lower, while Japan’s Nikkei 225 Index ended down 1.65%.

Asia was given a negative lead from the U.S., where the Dow Jones and S&P 500 ended lower after the Fed said Wednesday that it would reduce its monthly bond buying program by $10 billion to a total of $55 billion a month, in a widely anticipated decision.

Wall Street’s losses deepened after Fed Chair Janet Yellen indicated that the bank could begin to raise interest rates about six months after the bond-buying program winds up, which is expected to happen this fall.

In Tokyo, the Nikkei ended sharply lower as traders continued to monitor movements in the currency market. USD/JPY fell to a daily low of 102.20, moving off the previous session’s high of 102.67.

Automakers Toyota and Mazda saw shares fall 1.5% and 2.2% respectively, while Sharp and Fast Retailing slumped 5.4% and 2.2%.

Japanese megabanks were also lower with shares of the nation’s largest lender Mitsubishi UFJ Financial Group dropping 2.3%, while Sumitomo Mitsui Financial Group and Nomura Holdings retreated 2.5% and 1.3% respectively.

Meanwhile, in Australia, the ASX/200 Index ended at the weakest level since February 12 as losses in the mining sector weighed on the benchmark index.

Gold producers sold off after prices of the precious metal lost 2% on Wednesday. Newcrest Mining declined 7.9%, Perseus Mining dropped 7.2%, while Kingsgate Consolidated plummeted 24.4%.

Elsewhere, shares in mainland China and Hong Kong ended sharply lower as ongoing concerns over the health of China’s economy weighed.

Shares in the financial sector sold off amid worries about domestic bond defaults.

In Hong Kong, China Construction Bank shares lost 1.8%, Industrial and Commercial Bank of China fell 1.6%, while China Merchants Bank and China Citic Bank slumped 1.3% and 1.5% respectively.

Index heavyweight Tencent fell 2% after reporting disappointing corporate earnings.

Looking ahead, European stock market futures pointed to a lower open. The EURO STOXX 50 futures pointed to a loss of 1%, France’s CAC 40 futures fell 0.8%, London’s FTSE 100 futures indicated a drop of 0.5%, while Germany's DAX futures shed 0.8%.

Political leaders and finance ministers from the European Union are to hold the first day of an economic summit in Brussels.

Across the Atlantic, U.S. equity markets also pointed to a weaker open. The Dow Jones Industrial Average futures pointed to a fall of 0.2%, S&P 500 futures inched down 0.25%, while the Nasdaq 100 futures indicated a decline of 0.2%.

The U.S. is to publish the weekly report on initial jobless claims, as well as data on existing home sales and manufacturing activity in the Philadelphia region.