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Regional stocks took a weak lead-in from Wall Street, as U.S. benchmarks retreated from near record highs on Wednesday. Stocks were hit with a mix of profit taking, while investors also reassessed expectations for early monetary easing from the Fed.
The Nikkei 225 was by far the worst performer in Asia on Thursday, sinking 1.6% on steep losses in major automaker stocks.
Toyota Motor (NYSE:TM) Corp (TYO:7203)- Japan’s biggest automaker- sank nearly 4% after it said its Daihatsu unit will suspend all vehicle shipments in light of severe safety regulation breaches. Toyota was the biggest decliner on the Nikkei, as well as the biggest weight on the index.
The scandal covers about 64 models, and also involves models that Daihatsu had produced for Mazda Motor Corp (TYO:7261) and Subaru Corp (TYO:7270). The two fell between 2.7% and 4%, while peer Nissan Motors lost 3.1%.
Toyota did not specify the financial impact of the suspension. Daihatsu accounts for about 7% of Toyota’s overall sales.
Other automaker stocks were also caught in the selling pressure. Honda Motor Co Ltd (TYO:7267) lost 2.7%, while Isuzu Motors, Ltd. (TYO:7202) lost 1.7%.
Broader Japanese stocks saw heavy profit taking, after the Nikkei surged to 33-year highs on Wednesday. The index is among the best-performing Asian bourses this year, thanks largely to a dovish Bank of Japan.
Other Asian markets also saw some losses, but were sitting on strong gains over the past week after the Fed said it was done raising interest rates and will look at rate cuts in 2024.
Australia’s ASX 200 fell 0.4% from a 10-month high. South Korea’s KOSPI lost 0.6% on losses in heavyweight technology stocks, and also came off a three-month high.
Local media reports showed that the South Korean government will raise the threshold for capital gains taxes on stock investors to 5 billion won ($3.8 million) from 1 billion won.
Chinese shares saw some strength, with the bluechip Shanghai Shenzhen CSI 300 rising 0.6% after sinking to near five-year lows on Wednesday. But the Shanghai Composite fell 0.1%, while Hong Kong’s Hang Seng index lost 0.4%.
Concerns over a sluggish economic recovery weighed heavily on Chinese shares, which saw them severely lag their Asian peers this year. Staggered stimulus measures from Beijing also dented sentiment towards China.
Futures for India’s Nifty 50 index pointed to a mildly positive open, after the index tumbled from near record highs in the prior session. But the Nifty still remained among the best-performing Asian bourses, having hit a series of record highs earlier in December on growing optimism over the Indian economy.
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