Asian stocks dip as rate cut rally cools; Nikkei hit by Toyota scandal

investing.com:

Investing.com-- Most Asian stocks fell on Thursday as investors locked-in recent profits after a dovish Federal Reserve triggered a week-long rally, with Japan’s Nikkei 225 leading losses amid a deepening scandal involving the country’s biggest automakers.

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