Asian markets slumped Monday, ahead of central bank meetings in the U.S. and Japan this week and amid concerns over the June 23rd Brexit.
Stocks sank from across the board with Asia’s benchmark index poised for its biggest decline since April. Japan's Nikkei 225 tumbled 3.09 percent, as new strength in the yen put pressure on stocks, with the MSCI Asia Pacific Index falling 1.7 percent to 127.91 as of 12:06 p.m. in Tokyo.
The yen strengthened against the greenback ahead of the Bank of Japan's (BOJ) two-day policy meeting scheduled for June 15. The yen is considered a safe-haven currency and increased concerns over the risk of the UK exit from the EU seem to be driving funds into the currency.
The USD/JPY traded at 105.98 as of 12:44 p.m. HK/SIN, compared with levels around 106.80 on Friday afternoon local time.
BOJ To Delay Rate Change
According to Stephen Innes, a senior foreign exchange trader at OANDA Asia Pacific, "The BOJ ... will likely delay a rate cut in the meeting, favoring a coordinated event when the government releases its fiscal stimulus package in the autumn……This delay will likely appreciate the yen over the short term if the BOJ remains sidelined."
Japan’s Topix index tumbled 2.7 percent on the yen strengthening, on course for the lowest closing level in two months, while South Korea’s Kospi index dropped 1.6 percent. New Zealand’s S&P/NZX 50 Index slipped 0.7 percent and Hong Kong’s Hang Seng Index sank 2.5 percent. Australia is closed for a holiday.
In the U.S., S&P 500 Index futures fell 0.4 percent after falling 0.9 percent on Friday, with energy producers leading the slide and capping their worst session in five weeks.