Asian stocks dropped on Tuesday with nervous investors retreating from risk-taking equities ahead of the release of key US data that will dictate which way the Fed will jump on interest rates.
Traders bought dollars and yen in a drift toward safe-haven assets before the US ISM manufacturing survey due later in the day and jobs data due on Friday.
Japan’s Nikkei share average edged lower as a firmer yen weighed on investor sentiment, although banks provided a bright spot amid higher bond yields at home and abroad.
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The Nikkei ended the day down 0.04% at 38,686.31, giving up early gains as the yen changed course to strengthen as much as 0.5% against the dollar from a two-week low hit earlier in the session.
The broader Topix, with its lower proportion of tech companies and other exporters, advanced 0.64%.
Banks and insurers and were the top performers among the Tokyo Stock Exchange’s 33 industry groups, jumping 3% and 2.5% respectively. Lender Resona Holdings was the Nikkei’s biggest percentage gainer, with a 6.6% surge.
Long-term Japanese government bond yields rose to the highest in about a month, while equivalent US Treasury yields also gained after a holiday on Monday. Higher long-term yields boost revenue from investing and lending.
Meanwhile, semiconductor-related shares sank, with chip-testing equipment manufacturer Advantest slumping 2.25% after starting the day with gains of as much as 3.43%.
China and Hong Kong’s leading stock indexes slipped too, influenced heavily by substantial declines in the banking and energy sectors. China’s banking index fell 1.8% as four of the country’s five largest lenders reported lower second-quarter profits, weighed by the property sector crisis.
Investors also grappled with disappointing August manufacturing activity data from China.
The Shanghai Composite Index retreated 0.29%, or 8.06 points, to 2,802.98 but the Shenzhen Composite Index on China’s second exchange was up 1.06%, or 16.03 points, to 1,530.73.
Sydney, Seoul, Mumbai Drop
The CSI 300 index saw a slight increase of 0.26% but banks were among the top losers, while energy stocks also dipped 2.45% during morning trading.
In Hong Kong, shares in property company New World Development slumped to a two-decade low after the company estimated a $2.6 billion loss for the year to June. The Hang Seng Index fell 0.23%, or 40.48 points, to 17,651.49.
Elsewhere across the region, in earlier trade, there were few major catalysts to drive business with Wall Street closed on Monday for a public holiday.
Sydney, Seoul, Wellington, Taipei, Manila and Jakarta all fell, though there were small gains in Singapore and Bangkok while Mumbai was flat. MSCI’s broadest index of Asia-Pacific shares outside Japan ticked 0.5% lower.
In the forex market, the yen rose about 0.5% to 146.24 per dollar, while the dollar rose on the euro, sterling and the Antipodean currencies, reflecting a little less confidence that the Fed may opt for a 50 bp cut later in the month.
The dollar rose about 0.2% to $1.1054 per euro and rallies in the Australian and New Zealand dollars paused for breath, with the Aussie knocked down nearly 0.8% to $0.6740 and the kiwi down 0.7% to $0.6192.
Gold hovered at $2,494 an ounce after hitting a record high above $2,500 in August.
Oil prices have struggled for traction as demand worries weigh against tensions in the Middle East, and Brent crude futures slipped 0.5% to $77.13 a barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 0.04% at 38,686.31 (close)
Hong Kong – Hang Seng Index < DOWN 0.23% at 17,651.49 (close)
Shanghai – Composite < DOWN 0.29% at 2,802.98 (close)
London – FTSE 100 < DOWN 0.04% at 8,360.30 (0933 BST)
New York – Dow <> CLOSED (Monday)
- Reuters with additional editing by Sean O’Meara
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