Asian Shares Extend Losses On Worries About US Fiscal Position

Asian stocks traded mostly lower on Thursday, adding to steep losses in the previous session as the dollar surged and Treasury yields spiked following a U.S. credit rating downgrade from Fitch and better-than-expected ADP employment data.

Gold held near three-week lows while oil prices were up slightly after settling down about 2 percent in the U.S. trading session overnight.

U.S. private sector employment increased by 324000 jobs in July, well in advance of consensus forecast of 190,000 roles, and annual pay was up 6.2 percent year-over-year, adding to pressure on the Federal Reserve to maintain restrictive policy.

Investors also await Apple Inc. earnings due later today, with the iPhone maker expected to report its third consecutive year-over-year revenue decline. Amazon will also unveil its quarterly earnings later in the day.

Chinese shares fell, with the Shanghai Composite index falling around 0.2 percent after Morgan Stanley cut its rating on Chinese stocks. Hong Kong's Hang Seng index was down 0.1 percent.

Japan's Nikkei average was down over 1 percent as the yen held firm and data showed service sector activity in the country softened in July.

Seoul stocks were seeing modest losses, with the Kospi average down about 0.3 percent amid concerns about the recent rise in Treasury yields and the steepening of the yield curve.

Australian markets traded lower, with tech and commodity-related stocks pacing the declines. The benchmark S&P ASX 200 was down half a percent.

Across the Atlantic, New Zealand's benchmark S&P NZX-50 index was down 0.3 percent.

U.S. stocks and bonds suffered a wave of selling overnight after a surprise downgrade of the country's debt rating by Fitch, citing fiscal deterioration and repeated debt ceiling standoffs.

Also, data showed U.S. private sector employment jumped by much more than expected in July, reviving Fed rate hike bets.

The tech-heavy Nasdaq Composite plunged 2.2 percent while the Dow lost 1 percent and the S&P 500 gave up 1.4 percent.

European stocks also closed sharply lower on Wednesday amid worries about slowing global growth and the mounting cost to finance U.S. debt as interest rates rise.

The German DAX and the U.K.'s FTSE 100 both fell around 1.4 percent while France's CAC 40 shed 1.3 percent.

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