Asia’s major stock indexes began the week on the back foot with investors unnerved by the weekend’s aborted Russian rebellion, more signs of a weak China recovery and the prospect of more central bank tightening.
Oil was slightly higher after the cancelled mutiny by Russian mercenaries raised questions about Russian stability and crude supply, but a predicted markets panic failed to materialise.
Japan’s Nikkei share average fell for a third straight session, after spending the day flip-flopping between small gains and losses.
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The benchmark closed 0.25% lower at 32,698.81 after falling about 2.4% in the prior two sessions following its multi-month surge to a 33-year high of 33,772.89 last week.
The Nikkei has not fallen for more than two successive sessions since its current rally began in mid-March. The broader Topix lost 0.20% to 2,260.17.
The battered yen rose marginally on hints at looming government intervention and after a summary showing a central bank board called for an early revision of yield curve control.
The yen, down nearly 9% this year as global interest rate expectations rise and Japan’s central bank stays dovish, bounced as much as 0.3% to 143.27 per dollar.
Across in China, stocks fell too as tourism data during last week’s three-day Dragon Boat Festival pointed to weak economic recovery.
Trips for tourism in China during the Dragon Boat Festival holiday climbed 32.3% from a year earlier, but the rebound is smaller than that during the five-day May Day holiday.
Meanwhile, S&P Global cut its 2023 GDP growth forecast for China to 5.2% from 5.5% previously, after May data showed a post-COVID recovery was faltering in the world’s second-largest economy.
The Shanghai Composite Index dropped 1.48%, or 47.28 points, to 3,150.62, while the Shenzhen Composite Index on China’s second exchange retreated 1.81%, or 36.98 points, to 2,002.93.
The Hang Seng Index fell 0.51%, or 95.84 points, to 18,794.13 and the Hang Seng China Enterprises Index was down 0.35%. Artificial intelligence stocks slumped 3.4% following last session’s 5% plunge.
MSCI’s index of Asia-Pacific shares outside Japan slipped to a three-week low, as small falls in China, Taiwan and Australia offset minor gains in South Korea.
Putin’s Wagner Army Deal
Globally, there was an air of uncertainty too, after Russian mercenaries’ short-lived rebellion on Saturday, when they seized the southern city of Rostov and advanced on Moscow demanding the removal of Russian military commanders in charge of the war in Ukraine.
The private Wagner army then withdrew after striking a deal guaranteeing their safety and the passage of their leader, Yevgeny Prigozhin, to Belarus.
The consequences for the Ukraine war were not clear, though the challenge to Russian President Vladimir Putin’s authority was the starkest in decades of his leadership.
Brent crude futures were last up 0.2% at $74.02 a barrel having earlier fetched as much as $74.80. The rouble dropped to a 15-month low early in Moscow.
European futures gained 0.3%, S&P 500 futures rose 0.2% and FTSE futures added 0.1%.
Gold, which had hit a three-month low on Friday, rose 0.2% to $1,925 an ounce. US Treasuries were firm with yields, which fall when prices rise, marginally lower. Two-year yields fell 2 basis points to 4.731%. Ten-year yields fell 1.8 bps to 3.721%.
The risk-sensitive Australian dollar was steady at $0.6683. The euro nursed last week’s modest drop at $1.0903 and sterling held at $1.2730.
Key figures
Tokyo – Nikkei 225 < DOWN 0.25% at 32,698.81 (close)
Hong Kong – Hang Seng Index < DOWN 0.51% at 18,794.13 (close)
Shanghai – Composite < DOWN 1.48% at 3,150.62 (close)
London – FTSE 100 < DOWN 0.74% at 7,406.40 (0955 GMT)
New York – Dow < DOWN 0.65% at 33,727.43 (Friday close)
- Reuters with additional editing by Sean O’Meara
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