By Kenan Machado and Kosaku Narioka
Nikkei ends lower as financials suffer
Caution over Italy's impending referendum and uncertainty over oil weighed on stocks in Asia on Tuesday, with investors booking modest profits to hold cash.
Japan's Nikkei Stock Average was a major decliner among key Asian markets, ending down 0.3% and adding to Monday's 0.1% loss, with Tuesday's decline led by financial and electronics stocks.
The upward momentum for U.S. Treasury yields and the dollar against the yen following the U.S. election has eased in recent sessions, fueling more profit-taking pressure in the stock index.
The declines come as data released Tuesday showed that consumption in the country slid 0.4% from a year earlier in October, adjusted for price changes. It was nonetheless an improvement from the 2.1% drop in September.
"Real wage (growth) has been tamed under Abenomics," said Masahi Murata, vice president at Brown Brothers Harriman. Japan's aging society is reluctant to spend because they already own assets like a car and a house, he said.
Among key decliners, insurer Dai-ichi Life Holdings (8750.TO) ended down 1.4%, Mitsubishi Electric (6503.TO) was down 1.8%, and investment bank Nomura (8604.TO) declined 1.3%.
apanese markets couldn't shake off the impact of a stronger yen earlier in the day and ended lower despite the dollar gaining 0.4% against the yen in late Asian trading.
Elsewhere in the region, Australia's S&P/ASX 200 was down 0.1% and Hong Kong's Hang Seng Index lost 0.4%, while the Singapore Straits Times Index and South Korea's Kospi were roughly flat. The Shanghai Composite Index bucked the broader trend and closed up 0.2%.
"The market is going to go in a risk-off mood," ahead of Italy's referendum vote on Sunday, said Amir Anvarzadeh, global head for Japan equity sales at BGC Partners.
Italians are to vote on constitutional changes designed to scale back the country's legislature, speed up lawmaking and simplify the bureaucracy. Investors worry that a "no" vote and the resultant political uncertainty--including the possible resignation of Prime Minister Matteo Renzi--could derail efforts to shore up the country's fragile banking system.
"Weaker lenders such as MPS Veneto Banca would possibly be unable to raise fresh capital in a post-Renzi outcome," said Gary Burton, a market analyst at IG Markets.
Read:Italian bank shares dive on fears about potential referendum defeat (http://www.marketwatch.com/story/italian-bank-shares-dive-on-heightened-worries-about-referendum-defeat-2016-11-28)
And see:All the potential political risks looming in Europe, in one chart (http://www.marketwatch.com/story/all-the-potential-political-risks-looming-in-europe-in-one-chart-2016-11-14)
Meanwhile, oil prices fell amid growing doubts that the world's biggest oil producers would reach a deal to cut output, sending oil and gas stocks lower throughout the Asia on Tuesday. Brent crude , the international benchmark, was trading down 0.5% at $48.02 a barrel in Asian trade.
Read:OPEC oil meeting: 7 things you need to know (http://www.marketwatch.com/story/opec-oil-meeting-7-things-you-need-to-know-2016-11-28)
Among the main oil players, Australia's Oil Search (OSH.AU) ended down 1.6% with Woodside Petroleum (WPL.AU) declining 0.2% and Japan Petroleum Exploration (1662.TO) falling 1.4%. In Hong Kong, shares of offshore oil producer Cnooc (0883.HK) ended down 0.9%.
Korean markets managed to stave off losses as investors there perceived South Korea's embattled President Park Geun-hye's announcement asking the country's legislature to vote on whether she leaves office as a delay tactic.
"I think from the markets perspective there is not much change. It was already almost given that [Ms. Park] will step down, whether through impeachment or voluntarily," said Paul Choi, CLSA's head of research for Korea.
The broad declines in Asia on Tuesday follow a few weeks of overall gains, helped by optimism that U.S. President-elect Donald Trump would unleash a fiscal stimulus and sharply cut corporate taxes.
"It is a pause for breath," said Daniel Morris, senior investment strategist at BNP Paribas Investment Partners.
For the short term, markets will look at any negative fallout from Italy's Sunday referendum, he said. In the long term, however, the underlying drivers of a "Trump Trade" are still there and will continue through February, he said.
(END) Dow Jones NewswiresNovember 29, 2016 04:42 ET (09:42 GMT)
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