Asian Equities Lower on Risks of U.S. Interest Rate Rise

Asian shares markets got off to a watchful start on Wednesday as the mounting risks of a hike in U.S. interest rates as early as next month lifted the dollar and sovereign bond yields, pressuring currencies across the region.  Moves were minor with Japan’s Nikkei .N225 off 0.1 percent and South Korea’s KOSPI .KS11 up 0.1 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.3 percent.

Losses on Wall Street had also been modest with the Dow .DJI ending Tuesday off 0.27 percent, while the S&P 500 .SPX eased 0.22 percent and the Nasdaq .IXIC 0.19 percent.  Leading the way were shares in Apple (AAPL.O) which hit their lowest in over six months, apparently in part on worries about demand in China.

The latest scare over U.S rates came when Atlanta Federal Reserve President Dennis Lockhart told the Wall Street Journal that it would take “significant deterioration” in the economy for him to not support a hike in September.  “Given that Lockhart is middle-of-the-road to slightly dovish, these comments from him really add a lot of weight to the notion that the Fed really wants to go in September,” said analysts at Citi.