In Asian Equity Markets indices traded lower on Tuesday, with Italian politics and the slide in oil prices in the spotlight. Japan’s Nikkei 225 declined 0.79 percent amid broad-based losses, with strength in the yen weighing on major exporters. Electronics stocks traded lower, as did steelmakers, with the broader Topix slipping 0.67 percent. Over in South Korea, the Kospi edged down by 0.63 percent as gains in some technology names failed to lift the broader index. Banks and most manufacturing stocks saw declines. The Hang Seng Index fell 0.62 percent, hurt by losses in the heavily weighted financials sector. Shares of insurer AIA, in particular, fell 1.24 percent.
In Currency Markets the euro struggled near a 6-1/2-month low against the dollar on Tuesday, as the bounce seen at the start of the week faded and investors took a grim view on the prospect of fresh elections in Italy. The common currency was little changed at $1.1629 after slipping overnight to $1.1607, its lowest since Nov. 9. It had spiked to $1.1728 earlier on Monday after Italian President Sergio Mattarella rejected a vocal critic of the single currency as economy minister. The euro was down 0.45 percent at 126.620 yen following a descent to an 11-month low of 126.520. So far in May it has lost 4 percent against the yen, which tends to attract demand during political unrest and market turbulence.
In Commodities Markets oil prices were mixed in Asian trading on Tuesday, but remained under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply. Brent crude futures were up 31 cents, or 0.41 percent, at $75.61 a barrel, after settling at their lowest since May 8 at $75.30. U.S. West Texas Intermediate (WTI) crude was down $1.05, or 1.55 percent, at $66.83 a barrel, sitting around its lowest since April 17. Concerns that Saudi Arabia and Russia could boost output have put downward pressures on oil prices, along with rising oil production in the United States.
In US Equity Markets trading was closed due to Memorial Day holiday.
In Bond Markets Japanese government bond prices edged higher on Tuesday, supported by weaker equities as risk aversion gripped the broader markets. Safe-haven government bonds, such as JGBs, U.S. Treasuries and German bunds, have gained this week as political turmoil in Italy has curbed investor demand for riskier assets. The June 10-year JGB futures rose 0.06 point to 150.98. The 30-year JGB yield fell 1.5 basis point to 0.720 percent. The 40-year yield fell 2 basis points to 0.855 percent after a debt auction of the maturity attracted ample investor demand. The bid-to-cover ratio, a gauge of demand, at the 400 billion yen ($3.67 billion) 40-year auction rose to 3.92 from 3.19 at the previous sale in March.