Asian stock market declined Wednesday as weak economic reports from the U.S. and China weighed on the sentiment.
Japanese benchmark Nikkei declined 1.09 percent or 95.69 points to 8679.82, Hong Kong's Hang Seng plunged 1.40 percent or 271.21 points to 19158.70 and Chinese Shanghai Composite declined 0.29 percent or 5.97 points to 2037.68, while South Korean KOSPI Composite tumbled 1.74 percent and India's BSE Sensex fell 0.59 percent.
Concerns over global economic downturn resurfaced after the Institute for Supply Management (ISM) said that the U.S. factory activity contracted for the third straight month in August. The data came just days after an official report showed that Chinese manufacturing activity shrank for the first time in nine months, intensifying concerns over the growth slowdown in the world's second-largest economy.
ISM's manufacturing purchasing managers Index (PMI) declined to 49.6 in August, the lowest level in three years, from 49.8 in July and also fell short of Reuters’ expectation of 50.0 reading. However, the downward movement on Wall Street overnight was limited as the data was taken as further evidence to support the upcoming Fed quantitative easing.
The news that China's non-manufacturing sector growth declined in August to the slowest pace in a year after the recovery in July also added to the down trend. The country's PMI declined to 52 in August from 53.1 in the previous month. The index continues to remain in the area of expansion since the reading is above 50, but the fall in the reading would increase fears of the likelihood of a sharp slowdown in the economy.
Meanwhile, market participants opt for caution ahead of the ECB meeting, where the bank's president Mario Draghi is expected to unveil details of a long-awaited debt-buying plan to help lower Spanish and Italian bond yields. Manufacturing activity in the euro area contracted for the 13th straight month in August and also raised expectations that the central bank will cut interest rates to record lows at its monetary policy decision Thursday.
Expectations remained high after President Draghi told European lawmakers on Monday that purchases of short-term sovereign bonds to help debt-burdened countries like Spain and Italy would not breach European Union rules, Reuters reported.
Japanese Nikkei declined to a four-week low after the U.S. manufacturing data, which boded ill for exports to the world’s biggest economy. Panasonic Corp. fell 2.43 percent and Sony Corp. plunged 3.03 percent while Nissan Motor Co Ltd. fell 1.90 percent.
In Hong Kong, Belle International Holdings Ltd. declined 1.74 percent and Bank of China fell 1.79 percent while Lenovo Group Ltd. slumped 7.10 percent after Japanese NEC Corp sold its entire stake in Lenovo in a deal worth 18 billion yen.
South Korean KOSPI composite declined to one-month low on dismal U.S. data. Hyundai Motor Co. plunged 3.81 percent and Kia Motors Corp. fell 2.58 percent while Samsung Electronics Co Ltd declined 2.38 percent.
Gold and silver futures retreated during Asian trade as the euro dipped slightly against the dollar. Immediate-delivery gold fell 0.1 percent to $1,694.30 an ounce and silver lost 0.73 percent to $32.175 an ounce.