Asian stock markets were mostly lower Wednesday as lack of explicit hints about further quantitative easing from Fed Chairman Ben Bernanke during his congressional testimony disappointed investors.
Japan's benchmark Nikkei fell 0.32 percent or 28.26 points to 8726.74, South Korean KOSPI plunged 1.48 percent or 27.05 points to 1794.91 and Hong Kong's Hang Seng plunged 1.11 percent or 215.45 points to 19239.88 while Chinese Shanghai Composite gained 0.37 percent and Indian benchmark BSE Sensex was trading flat.
Market sentiment turned negative as Bernanke told the Congress that the Fed was prepared to take further action if situation deteriorated but offered no hint that the Federal Open Market Committee was close to launching a third round of large-scale asset purchases. Bernanke's testimony disappointed investors who had hoped for a strong signal that more stimulus was on the way.
People should not have been expecting Bernanke to come out telegraphing additional easing. The expectation should have been he would effectively reiterate everything that's been said since the last meeting. Markets might find that disappointing but that's the reality, Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, told Bloomberg.
However, Bernanke's downbeat tone on the economy, especially on the jobs market, kept further monetary stimulus expectations alive in August or September. Analysts at Credit Agricole expects the FOMC would certainly give a serious consideration to further policy accommodation at its September meeting if the jobless rate remains stubbornly high without signs of a pickup in activity.
Meanwhile, downbeat comments from Chinese Premier Wen Jiabao also weighed on the sentiment. Wen noted more factors of instability and uncertainty in the global economy and warned that the slackening economic growth would result in rising job losses.
Property developers led the declines in Hong Kong on concerns that stable home prices in China may limit Beijing's scope for further interest rate cuts this year. China Resources Land slumped 5.67 percent and China Overseas Land & Investment Ltd plunged 4.42 percent in Hong Kong while Poly Real Estate Group Co plunged 4.85 percent in shanghai.
Japanese Nikkei pared earlier gains and ended lower. Power companies' shares extended losses on nuclear safety concerns. Kansai Electric Power plunged 6.30 percent and Hokuriku Electric Power Co. slumped 21.35 percent on news that a fault line was found right under its nuclear power plant which may need to be abandoned, Reuters reported.
Among the other stocks, Canon Inc. gained 0.63 percent and Konami Corp gained 2.27 percent while Olympus Corp surged 6.35 percent.
South Korean shares plunged as declines from financial companies weighed. Hana Financial Group declined 2.71 percent and Woori Finance Holdings declined 2.64 percent while chip Maker SK Hynix Inc. plunged 4.93 percent.