Asian stocks drop before Bank of Japan, Fed meetings as commodities shares retreat

People walk on a street in front of the Bank of Japan headquarters in Tokyo, Japan, on March 31, 2016.
People walk on a street in front of the Bank of Japan headquarters in Tokyo, Japan, on March 31, 2016.PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Asian stocks fell for a third day on Tuesday (April 26) as raw-materials shares declined and Tokyo equities slumped before this week's central-bank meetings in the US and Japan.

The MSCI Asia Pacific Index slipped 0.3 per cent to 132.41 as of 9:10 am in Tokyo. While the Federal Reserve is expected to refrain from raising borrowing costs on Wednesday, investors will be on the lookout for any shifts in its guidance on the likely trajectory of increases. The Bank of Japan's meeting concludes the following day and most economists predict monetary stimulus will be stepped up in Asia's second-biggest economy.

"While policies are supportive of equities, valuations look expensive," said Hans Goetti, the Dubai-based chief strategist for the Middle East and Asia for Banque Internationale à Luxembourg, which has US$40 billion under management. "First-half earnings don't really look great. Unless you have very good earnings coming through in the second half, I think valuations could be on the high side."

Japan's Topix index lost 0.6 per cent as the yen traded at 111.04 per US dollar. The currency rebounded 0.5 per cent on Monday after falling the most since October 2014 on Friday.

Australia's S&P/ASX 200 Index was little changed while New Zealand's S&P/NZX 50 Index slipped 0.2 per cent. Both markets resumed trading after Monday's holiday.

South Korea's Kospi index fell less than 0.1 per cent. The nation's economy slowed in the first quarter as sluggishness in exports weighed on corporate investment and consumers cut back on spending.

Markets in China and Hong Kong have yet to start trading.

Futures on the FTSE China A50 Index and the Hang Seng Index were both up 0.1 per cent in their most recent trading. The Shanghai Composite Index declined 0.4 per cent on Monday to the lowest since March 29, led by raw-material producers after exchanges moved to cool trading in commodities including cotton and thermal coal.

E-mini futures on the Standard & Poor's 500 Index were little changed. The US equity benchmark index dropped 0.2 per cent on Monday as investors awaited earnings reports to gauge corporate health. Amazon.com, Apple and Boeing are among the companies due to report their quarterly results this week.

West Texas Intermediate crude climbed 0.8 per cent early Tuesday after sliding 2.5 per cent on Monday.