TOKYO Dec 4 Asian shares could come under
pressure on Wednesday after the world's share markets were
rattled by fears of an impending reduction in the U.S. Federal
Reserve's stimulus following positive U.S. data.
European shares suffered their biggest falls since August
while Wall Street retreated for a third straight day on Tuesday,
dropping from record levels as investors took profits.
In Asia, Japanese shares are likely to open lower, with the
Nikkei futures falling more than one percent from
On Wall Street, the Dow Jones industrial average fell
0.6 percent while the Standard & Poor's 500 Index
declined 0.32 percent, with consumer discretionary shares
leading the losses amid signs of weak holiday
Revived talk of tapering in the Fed's bond buying could hurt
emerging market shares and currencies in particular.
"Ample liquidity from the Fed had flown to emerging markets,
in a way hiding all the problems each market has. But after the
Fed signalled tapering in May, investors are focusing on them,"
said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking
In Asia, investors' concerns include persistent current
account deficits in India and Indonesia, as well as the latest
political instability in Thailand.
The Indonesian rupiah was buried near five-year lows hit
last week while the Thai baht flirted with a three-month low
Expectations that the Fed will go ahead with paring its $85
billion-a-month bond-buying program look set to intensify if
upcoming U.S. economic data shows encouraging growth.
While Friday's U.S. jobs report for November is seen as by
far the most important, traders will be looking to the ADP
employment report, new home sales figures, services activity
readings from the Institute for Supply Management, all of which
are scheduled for Wednesday.
Solid U.S. manufacturing data released on Monday boosted
optimism that the U.S. economy was barely damaged by a
government shutdown in October.
Talk of tapering also disrupted the yen's decline, which has
been propelled by speculation of more carry-trades on the back
of improving risk sentiment.
The dollar fell about one percent to 102.40 yen from
Tuesday's six-month high of 103.38 yen.
The euro was steadier at $1.3595, not far from
one-month high of $1.3622 hit last week.
Gold and silver, which like stocks have benefited from the
U.S. stimulus because of inflation fears, traded near 5-month
Gold last stood at $1,222.74 per ounce near Tuesday's
five-month low of $1,215.60 while silver traded at $19.10
, having slipped to $18.94 on Tuesday.