ASIA MARKETS: Asia Stocks Slump, With Japan Weak On Rising Yen

By John Phillips and Wei-Zhe Tan

Asian markets were down Thursday tracking a negative lead from Wall Street, with a stronger yen hitting the Japanese market ahead of the Bank of Japan's meeting outcome.

Investors took a cue from Wednesday's losses in the U.S. following lower-than-expected readings on the U.S. non-manufacturing sector and private-sector jobs growth.

Focus was on the Bank of Japan's policy meeting outcome due later Thursday. Expectations for fresh easing measures are high, as it will be the first meeting under new Gov. Haruhiko Kuroda, who is committed to realizing the bank's 2% inflation target.

All 10 economists surveyed by Dow Jones expect the Bank of Japan to expand its asset purchases, with some betting it will increase the amount by Yen15 trillion-Yen20 trillion ($160 billion-$215 billion) a year and start buying Japanese government bonds with maturities longer than three years, the current limit.

Seven of those surveyed say the central bank will decide to make its asset-buying program "open-ended" from this month or next, instead of waiting for next January as scheduled. Two expect the introduction of a new easing target in addition to its existing inflation and asset-buying targets.

"In the absence of open-ended, multi-asset-class purchases to bring consumer price inflation to 2.0% within two years, there is a more than reasonable chance that the board may well disappoint," David Scutt, Treasury dealer at Arab Bank, wrote in a note to clients.

Japan's Nikkei Stock Average underperformed its regional peers, falling 1.7% amid a stronger yen. Major exporters were lower: Canon (CAJ) dropped 4.3%, Nintendo (NTDOF) slid 2.6%, and Toyota Motor (TM) fell 1.4%.

In Sydney, the S&P/ASX 200 fell 0.8%. Resources plays weighed on the Australian market amid commodity price weakness including a decline in copper to an eight-month low overnight. BHP Billiton (BHP) fell 1.3%, Newcrest Mining (NCMGF) dropped 4.2% and Rio Tinto (RIO) lost 1%.

In foreign-exchange markets, the yen was stronger against the U.S. dollar (USDJPY) and the euro (EURJPY), as investors priced-in worries that the Bank of Japan's policy outcome could underwhelm market participants.

The greenback traded at Yen92.95 versus Yen93.05 late Wednesday in New York, while the euro was at Yen119.39, down from Yen119.51.

"Our baseline view remains that risks on [the dollar's rate against the yen] this month are skewed to the downside, given sky-high expectations," Westpac's Sean Callow wrote in a note.

Investors were also focused on the European Central Bank's policy decision due later Thursday, as well as Friday's U.S. jobs data for trading cues.

South Korea's Kospi Composite fell 1.6% amid continued concerns over North Korea's escalating military threats, while Singapore's Straits Times Index was off 0.2%.

Markets in mainland China, Hong Kong and Taiwan were shut for holidays.

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