Most Asian markets turned volatile on Friday, alternating between steep falls and gains, following losses incurred over the past few trading sessions, after Federal Reserve Chairman Ben Bernanke's comments on Wednesday about winding down the Fed's bond-buying program, cast a pall over global financial markets.
Asian stocks hit a fresh 9-1/2-month low on Friday morning, tracking the heavy losses sustained by Wall Street on Thursday, as markets around the world tried to understand the implications of a world without the Fed's monthly $85 billion stimulus.
China’s Shanghai Composite index was down 0.53 percent while Hong Kong’s Hang Seng traded down 0.72 percent in afternoon trade on Friday. Both the indexes had dropped more than 2 percent earlier in the morning session.
Shares on these indexes pared losses after reports that Shanghai interbank money-market rates fell sharply from record highs registered Thursday, which had given rise to fears of a liquidity crunch. The Chinese central bank’s guidance to major state-owned banks to resume providing funds, helped ease the pressure on markets.
South Korea’s KOSPI Composite Index traded down 1.49 percent while Australia’s S&P/ASX 200 dropped 0.41 percent in the afternoon session. Japan’s Nikkei, on the other hand, pared initial losses of up to 2 percent to end the day up 1.66 percent at 13,230.13, aided by a falling yen, which lost 0.66 percent against the dollar.
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India’s BSE Sensex, which opened in the red recovered some ground and was trading 0.32 percent higher in the afternoon. The Indian rupee, which had hit a record low of 59.93 against the dollar on Thursday and ended the day at 59.57/58, was trading at 59.23/25 against the dollar on Friday afternoon.
On Thursday, U.S. stocks recorded sharp losses with the S&P 500 falling 2.5 percent to record its worst fall since November 2011, following the Fed’s comments about withdrawing monetary stimulus, weak Chinese manufacturing data, and a liquidity crunch in Chinese markets brought on by a sharp rally in Shanghai interbank rates on Thursday.