Record breaking highs on Wall Street failed to boost sentiment in Asian trade on Tuesday, with most major regional markets slipping.
The Nikkei 225 in Japan fell 0.25 percent, following fresh pressure from a relatively stronger yen. The Japanese yen traded as high as 100.86 against the dollar, compared with levels above 101 on Monday. As of 10:24 a.m. HK/SIN, the currency pair traded at 100.95.
The Topix index fell 1.4 percent to 1,298.47 at the trading close in Tokyo, with volumes 20 percent below the 30-day average.
Investors are watching the direction being taken by Tokyo shares close in the morning session in order to gauge whether the Bank of Japan will step in to buy exchange-traded funds in the afternoon. Typically the central bank buys the securities when the Topix closes lower at the trading break.
According to Masayuki Otani, chief market strategist at Securities Japan Inc. in Tokyo, “With few investors trading right now, small sell orders can make the whole market crumble. There were hopes that the BOJ would buy ETFs today, but it doesn’t look like that’s happening. Also the yen gained during the trading break. Equity investors are cutting their losses.”
The Kospi returned to trading after being shut on Monday for a public holiday, with the index up a modest 0.11 percent. In Hong Kong, the Hang Seng index was down 0.1 percent and in Australia, the benchmark ASX 200 was nearly flat at 5,536.20.
Yen Gains
Speculation the Federal Reserve will refrain from raising rates anytime soon increased after data on U.S. retail sales last week was less than analyst estimates and this has complicated things for Japanese policy makers who wish to stimulate the country’s economy.
“The yen is being driven by the dollar’s weakness, spurred on by increasing expectations the Federal Reserve won’t raise rates this year,” Nicholas Teo, a strategist at KGI Fraser Securities in Singapore told reporters.