Commodity stocks drove declines in Asia as crude oil traded near a three-month low and as a rebound in the yen sent Japanese equities down for a third day. Gold rallied while the pound fell.
The Asian stock benchmark swung back to losses as Japans Topix index fell more than 1.5 percent amid a second session of gains in the yen. Malaysias ringgit slumped with U.S. crude nearing $43 a barrel on concern American producers are increasing drilling efforts despite already abundant supplies of the commodity. Gold snapped a two-day decline with 10-year U.S. Treasuries as investors count down to central bank meetings in the U.S. and Japan later this week. Crops dropped and sterling fell for the second time in three days.
Driven to their highest point this year on expectations that central banks will continue to support their economies, global equities retreated on Monday as traders gravitated to the sidelines. While the Fed will probably keep key borrowing costs on hold on Wednesday, economists predict the Bank of Japan will bolster stimulus two days later. Oil producers in the U.S. continue to increase drilling, even as local crude inventories remain high. While analysts predict data Wednesday may show a drop in American stockpiles, gasoline supplies — already at their highest level in decades — are projected to rise again.
A stronger yen and cheaper oil prices are likely to damp investor sentiment, said Toshihiko Matsuno, a senior strategist with SMBC Friend Securities Co. Investors are likely to zone in on individual stocks as their respective earnings reports come out.
The MSCI Asia Pacific Index lost 0.4 percent as of 10:01 a.m. Tokyo time, with groups of energy producers and raw materials companies falling at least 0.7 percent.
The Topix dropped 1.6 percent, set for its steepest one-day decline since July 6, as Australias S&P/ASX 200 Index fell 0.6 percent. The Kospi index in Seoul and New Zealands S&P/NZX 50 Index traded little changed.
Futures on the S&P 500 slipped 0.2 percent to 2,159 Tuesday, after contracts on Hong Kongs Hang Seng and Hang Seng China Enterprises indexes retreated at least 0.6 percent in most recent trade.
Both Hong Kong and the Philippines report on trade Tuesday, and Singaporean factory output data is also due.
Japans currency strengthened 0.9 percent to 104.82 per dollar, extending a 0.3 percent climb from last session, when the yen was whipsawed amid a Nikkei newspaper report that the government planned to to double the amount of money planned for its fiscal stimulus package.
Emerging-market currencies retreated in Asia, with the ringgit falling for a seventh straight day, its longest run of declines in more than a year. Other oil-linked currencies also declined, with the Norwegian krone losing 0.3 percent in a third day of losses. Koreas won slipped 0.4 percent.
Sterling joined the pullback, weakening 0.4 percent against the dollar to $1.3094 and giving up 1.3 percent to the yen after the Financial Times reported Bank of England policy maker Martin Weale now favors immediate stimulus for the U.K. economy.
The Bloomberg Dollar Spot Index fell 0.1 percent following a two-day gain.
West Texas Intermediate crude rose 0.1 percent to $43.19 a barrel after sliding 4 percent over the past three sessions.
Energy analysts polled by Bloomberg expect government data to show a 2.25 million-barrel drop in U.S. oil stockpiles, a 10th weekly drop, while gasoline inventories probably rose by 600,000 barrels.
You cant ignore the size of the inventory overhang, Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. The fundamentals dont support a move up through $55 to $60 a barrel, but were not seeing a capitulation like we did at the start of the year.
Gold for immediate delivery added 0.5 percent to $1,322.32 an ounce after slipping 0.5 percent on Monday.
Yields on 10-year Treasury notes fell for the first time in three days amid renewed demand for haven assets. Rates slipped by two basis points, or 0.02 percentage point, to 1.55 percent.
In Japan, similar maturity debt yielded negative 0.24 percent, little changed from Monday, while yields on Australian government bonds due in a decade climbed one basis point to 1.92 percent.