Asian stocks fall with global markets before key central bank meetings, STI down 0.8%

A businessman looks at an electronic indicator showing the closing numbers of the Tokyo stock market in Tokyo, Japan on June 14.
A businessman looks at an electronic indicator showing the closing numbers of the Tokyo stock market in Tokyo, Japan on June 14. PHOTO: AFP

SINGAPORE (BLOOMBERG) - Asian stocks fell on Tuesday (July 26), after US equities slipped from a record, before policy meetings by the Federal Reserve and Bank of Japan this week.

The MSCI Asia Pacific Index slid 0.2 per cent to 133.90 as of 9:04 am in Tokyo.

Japan's Topix index fell 0.7 per cent, dropping for a third straight day, as the yen traded at 105.57 against the US dollar. The government is planning a fiscal stimulus package that includes 6 trillion yen in spending, double the original estimate, the Nikkei newspaper reported.

Singapore's Straits Times Index was down 0.8 per cent at 2,906.53 as of 9:08 am.

South Korea's Kospi Index lost 0.2 per cent. Australia's S&P/ASX 200 Index fell 0.2 per cent. New Zealand's S&P/NZX 50 Index declined 0.1 per cent after closing at an all-time high on Monday. Markets in China and Hong Kong have yet to start trading.

Global equities have edged lower before this week's central bank policy meetings and amid a slew of corporate results. The BOJ is widely expected to add to stimulus at the end of a two-day meeting on July 29, with 32 of the 41 analysts surveyed by Bloomberg predicting policy makers will expand their record program. While the Fed is most likely to leave interest rates unchanged on Wednesday, futures traders are predicting a 48 per cent chance borrowing costs will rise in December.

"The market expectation for the BOJ to move is very high," Angus Nicholson, a strategist at IG Markets in Melbourne, said on Bloomberg Radio. "There's a real risk we would see a sharp retracement if they disappoint."

Futures on the FTSE China A50 Index were little changed in most recent trading, while those on the Hang Seng Index slipped 0.7 per cent. The Shanghai Composite Index rose 0.1 per cent on Monday. Almost half of the benchmark gauge's members are flashing sell signals, up from 5 per cent two weeks ago, moving average convergence-divergence data show. The last time the proportion of bearish signs was this high in April, a 9 per cent drop followed.

Futures on the S&P 500 Index were little changed. The US equity benchmark index fell 0.3 per cent, retreating from an all-time high, as a tumble in the price of crude sank energy shares.

West Texas Intermediate crude futures were 0.2 per cent higher in early Asian trading after slumping 2.4 per cent on Monday. Oil traded near a 3-month closing low before the release of US fuel stockpile data that's expected to show an increase in refined-fuel stockpiles.