Asian stocks closed mixed to lower on Friday, giving up some of Thursday's sharp gains as investors adjusted positions ahead of next week's US Federal Reserve meeting and an expected hike in interest rates, dealers said.
They said some profit-taking was to be expected after Thursday's rebound and fresh speculative talk that the Fed could either opt for a 50 basis point hike next week, rather than 25 points, or raise again in August.
Reports of investment houses revising up their year-end forecasts for US interest rates to as high as 6.0 percent -- against the current 5.25 percent -- added to the cautious tone as investors tried to get a firm handle on inflation expectations.
The markets have been on an emotional roller-coaster ride for the past several weeks, with sentiment on inflation and the interest rate outlook changing radically at times.
Dealers said the hope is that while the Fed will almost certainly hike rates next week, it will also give some clearer guidance as to the outlook which would allow some certainty on this key issue for equities.
If policy, however, remains dependent on incoming data -- the likely Fed stance -- then more volatility can be expected.
On the day, Tokyo closed little changed along with Hong Hong while Taipei lost 0.51 percent and Seoul was down 0.82 percent, with Sydney slipping back below the key 5,000 points level on a loss of 0.92 percent.
Mumbai, one of the most volatile and worst affected markets in the past several weeks, rose 1.22 percent after sharp early losses.
Taiwan share prices closed down 0.51 percent, coming off early lows as bargain-hunting helped offset the impact of a weak overnight performance on Wall Street amid continuing concerns about interest rates and the economy, dealers said.
Thin turnover reflected investor reluctance to extend Thursday's solid upturn given uncertainty over a parliamentary vote on Tuesday on whether a referendum should be held on President Chen Shui-bian's (
The market is likely to remain under pressure in the week ahead, with investors waiting for a US Federal Reserve policy meeting on Wednesday and Thursday when interest rates are widely expected to be hiked again.
The weighted index lost 32.84 points at 6,452.31, off a low of 6,362.23 and a high of 6,462.91 on turnover of NT$77.54 billion (US$2.37 billion). Declines led risers 526 to 349, with 108 stocks unchanged.
"Investors here have been experiencing a roller-coaster ride in tandem with a still volatile Wall Street," said Oliver Fang, a Yuanta Core Pacific Securities assistant vice president who serves mainly foreign investors.
Japanese share prices closed little changed to easier, recovering from early losses in cautious trade after a weak performance on Wall Street overnight, dealers said.
They said strong gains on Thursday, when the local market jumped 3.36 percent, left investors reluctant to move aggressively ahead of the weekend and next week's expected US interest rate hike.
The Tokyo Stock Exchange's benchmark Nikkei-225 index slipped 11.65 points or 0.08 percent to close at 15,124.04. The broader TOPIX index of all first-section shares shed 3.55 points or 0.23 percent to 1,545.57.
Losers beat gainers 1,076 to 504, with 116 stocks unchanged.
South Korean share prices closed 0.82 percent lower on pressure from foreign investors, with the market giving up all the gains made on Thursday, dealers said.
They said investors hesitated to build fresh positions ahead of the weekend and the US Federal Reserve meeting next week when US interest rates are widely expected to be increased another 25 basis points to 5.25 percent.
Continuing concerns about a possible North Korean long-range missile test added to the negative tone.
The KOSPI index fell 10.21 points at 1,228.62, after trading between 1,210.99 and 1,228.96. Volume was 179 million shares worth 2.27 trillion won (US$2.3 billion). Falls outnumbered rises by 504 to 241.
Hong Kong share prices closed little changed in cautious trade following Wall Street's losses overnight and ahead of the US Federal Reserve's policy meeting next week, dealers said.
They said the market recovered from modest morning losses in line Tokyo but investors did not feel confident enough to push stocks ahead further.
The Hang Seng Index slipped 17.89 points or 0.11 percent at 15,808.81, off a low of 15,682.81 and a high of 15,828.49. Turnover stood at HK$18.45 billion (US$2.4 billion).
Dealers said they expect trade to be volatile next week given the expiry of Hang Seng June futures contracts, more US economic data and of course the key Fed meeting on interest rates.
"The market mirrored the weak performance of overseas. Some [investors] took profits after [Thursday's] gains. Overall the mood was cautious. Investors would rather wait for next week's Fed meeting before trading aggressively," said Ben Kwong, research head at KGI Asia.
Chinese share prices closed 0.59 percent higher, supported by gains in the telecom sector which helped offset liquidity pressure before the listing of the Bank of China, the country's second largest lender, next month, dealers said.
The market overall continued positive, having risen over the past week, and while there is some concern about the impact on liquidity of the Bank of China's and other Initial Public Offerings (IPOs), the new share issues will help generate fresh interest longer-term.
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