Asian Shares Follow U.S. Peers Lower On Risk Aversion

(RTTNews) - Asian stocks took a pounding on Monday, as hawkish comments from several Federal Reserve officials, a sell-off in bond and oil markets and renewed concerns about North Korea's nuclear test spooked investors.

The probability for a September rate hike inched up somewhat after Fed officials Eric Rosengren, Daniel Tarullo and Robert Kaplan signaled openness to a rate hike in 2016 to prevent the economy from overheating.

Benchmark U.S. crude futures fell about 1.5 percent in Asian trade to extend Friday's 4 percent slide, as data showed increased oil drilling activity in the United States.

North Korea is ready to carry out another nuclear test at any time, South Korea's defense ministry was quoted as saying today, a day after North Korea said it would take multi-step measures to strengthen its nuclear strike forces in response to the hostile U.S. policy.

China's Shanghai Composite index dropped 56.88 points or 1.85 percent to 3,021.98, the biggest single-day loss since July 27 on worries that central banks may be running out of ammunition to support economic growth. Hong Kong's Hang Seng was down 809 points or 3.36 percent at 23,290.

Japanese shares fell the most in more than one month, as increased risk aversion revived demand for the yen and media reports suggested that the Bank of Japan is studying several options to steepen the bond yield curve to encourage short and medium-term corporate lending.

Better-than-expected core machinery orders data for July indicating a pickup in capital spending had little impact on investor sentiment ahead of next week's FOMC and BOJ meetings.

The Nikkei average tumbled 292.84 points or 1.73 percent to 16,672.92, the lowest level since Aug. 26. The broader Topix index closed 1.54 percent lower at 1,323.10. Nippon Steel & Sumitomo Metal, Toshiba, Mitsubishi Materials, Mitsumi Electric, Sumitomo Metal Mining, Alps Electric and Sumco were amongst the worst performers.

Agrochemical manufacturer Kumiai Chemical Industry plunged 12.4 percent after downgrading its full-year operating profit forecast. Ono Pharmaceutical lost 2.8 percent on a Nikkei report that a rival product for the drugmaker's Opdivo is set to be approved by the Japanese government for cancer treatment.

Australian shares hit two-month lows, with losses seen across the board following Wall Street's plunge on Friday. The benchmark S&P/ASX 200 dropped 119.60 points or 2.24 percent to 5,219.60 while the broader All Ordinaries index shed 121.40 points or 2.23 percent to 5,319.10.

Lower commodity prices dragged down resource stocks, with BHP Billiton, Origin Energy, Santos, Fortescue Metals Group and Newcrest Mining losing 4-5 percent. The big four banks dropped 1-3 percent. Elders soared over 5 percent after it decided to exit from its long haul live export business. Novogen jumped 15 percent after winning FDA investigational new drug application approval.

Seoul shares hit five-week lows as investors fretted over the rise in geopolitical tensions and the possibility of a Fed rate hike in September. The Kospi average dropped 46.39 points or 2.28 percent to 1,991.48.

Market bellwether Samsung Electronics fell as much as 7 percent after the company urged consumers worldwide to stop using the Galaxy Note 7 phones and exchange them as soon as possible to limit the damage caused by the fire-prone devices.

New Zealand shares fell sharply as comments from several Fed officials changed the narrative for rate-hike expectations. Also, investors remained focused on Wednesday's second-quarter GDP figures. The benchmark S&P/NZX 50 index tumbled 188.84 points or 2.53 percent to 7,279.76, with high dividend yield stocks among the worst hit.

Markets in Malaysia, Singapore and Indonesia were closed in observance of Eid-ul-Adha. Benchmark indexes in India and Taiwan were down over 1 percent each as a sell-off in global bond markets spurred risk aversion.

The Dow Jones Industrial slumped 2.1 percent on Friday and the S&P 500 lost 2.5 percent to hit a two-month closing low, while the tech-heavy Nasdaq fell 2.5 percent to reach its lowest closing level in well over a month.