Asian shares struggled to find their footing on Tuesday and the dollar clawed back ground lost after downbeat U.S. economic data contributed to an uninspiring session on Wall Street.
European equities were expected to open around 0.5 percent higher on Tuesday from their close on Thursday before the long Easter holiday weekend, said spreadbetter IG.
Investors awaited Federal Reserve Chair Janet Yellen’s speech at 1620 GMT for fresh signals on the outlook for U.S. interest rate hikes, after a chorus of hawkish comments from other Fed officials.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped about 0.3 percent. Australian shares finished about 1.6 percent lower, in their first day of trade following the holiday weekend.
China’s blue-chip CSI300 index .CSI300 was down 0.84 percent, while the Shanghai Composite Index .SSEC lost 1.1 percent.
“Once bitten, twice shy. Investors burnt by last year’s market crash are still too scared to enter the market, which is why we see a trading pattern of quick profit-taking,” said Yang Hai, analyst at Kaiyuan Securities Co.
Japan’s Nikkei .N225 ended down 0.2 percent as the Japanese fiscal year draws to a close on Thursday, with the mood not helped by mixed economic data released before the market opened.
Japanese household spending rose 1.2 percent in February from a year earlier in price-adjusted real terms, in contrast with the median forecast for a 1.5 percent fall, partly because of the extra Leap Year day. But the country’s jobless rate inched up to 3.3 percent, and retail sales fell short.
U.S. data released on Monday also showed signs of weakness, with consumer spending barely rising last month and inflation retreating. That suggested the Federal Reserve could remain cautious about raising interest rates this year even as the labour market rapidly tightens.
Against the yen, the dollar edged up about 0.1 percent to 113.61 yen JPY=, though below its session high of 113.74. The euro was also steady at $1.1189 EUR=.
The dollar index, which tracks the U.S. currency against a basket of rivals, added about 0.1 percent to 96.066 .DXY.
Speculation of more monetary stimulus and talk that Japanese Prime Minister Shinzo Abe might delay an unpopular sales tax hike and call a snap election kept the yen under pressure, though Abe insisted on Tuesday that neither option was planned.
Despite the divergence in monetary policy expectations, with the Fed still seen on track to hike rates this year and the Bank of Japan expected to take additional stimulus steps, the yen remained hamstrung by uncertainty over whether the BOJ will cut interest rates deeper into negative territory.
“We’re still experiencing the hangover from the BOJ’s negative interest rate policy, which is driving a lot of safe-haven flows,” said Jennifer Vail, head of fixed-income research at U.S. Bank Wealth Management in Portland, Oregon.
“The market is waiting to see if a further move into negative territory is going to be part of policymakers’ toolbox,” she said.
Crude oil extended overnight losses, as analysts forecast another rise to record levels for U.S. crude stockpiles. Brent LCOc1 was down 0.9 percent at $39.91 a barrel, while U.S. crude CLc1 fell 0.8 percent to $39.09. [O/R]
Gold dipped slightly on Tuesday, but held above a one-month low on a softer dollar and weak U.S. economic data that dented expectations of an immediate hike in U.S. interest rates.
Spot gold XAU= was down 0.2 percent at $1,218.55 an ounce, holding above a one-month low as the weak U.S. data dented expectations of an immediate hike in U.S. interest rates.