Asian Stocks Retreat Amid Caution Before OPEC, Italy Referendum

(Bloomberg) -- Asian stocks fell after a three-day rally as investors adopted a cautious tone ahead of key events from OPEC talks to the U.S. jobs report and Italy’s referendum.

The MSCI Asia Pacific Index slid 0.1 percent to 136.47 as of 4:15 p.m. in Hong Kong, as telecom and technology shares led losses among most industry groups. Japan’s Topix index closed about one point lower after a 12-day surge, while a measure of Chinese shares traded in Hong Kong ended a seven-day rally. Futures on the S&P 500 Index were little changed after the underlying gauge fell 0.5 percent on Monday.

Investors are turning their attention to the OPEC meeting on Wednesday and Italy’s vote on constitutional reform at the weekend with global equities on course to post the biggest monthly gain since July. U.S. President-elect Donald Trump’s shock victory has spurred a rally in the dollar and U.S. shares as well as advances in Japanese stocks amid renewed optimism in the world’s biggest economy.

“We have had a significant rally in the dollar and a number of other markets, with a selloff in global bond yields, and they’ve moved to levels that suggest we could pause here for some time,” said Greg Gibbs, founder and director at Amplifying Global FX Capital LLC in Breckenridge, Colorado. “The yen would probably come back and receive some demand as a safe haven if we get some negative events come through.”

The Topix pulled back from its highest level since the Bank of Japan introduced negative interest rates in January. The gauge’s rally to Monday was its longest winning streak since June 2015. Data on Tuesday showed Japan’s household spending dropped for an eighth straight month and retail sales fell slightly in October, underscoring weak domestic consumption. The unemployment rate remained at the lowest in two decades.

Australia’s S&P/ASX 200 Index slipped 0.1 percent and New Zealand’s S&P/NZX 50 Index was little changed. The Kospi index erased losses after South Korean President Park Geun-hye said she’s willing to resign following an influence-peddling scandal that’s shaken Asia’s fourth-biggest economy. 

Hong Kong’s Hang Seng Index lost 0.4 percent while the Hang Seng China Enterprises Index retreated 0.3 percent. The Shanghai Composite Index climbed 0.2 percent, with the gauge trading at the highest since January.

Philippine equities dropped to the lowest level since March 1, while Vietnam’s VN Index halted a three-day slide and Indonesian stocks climbed 0.8 percent. Indian shares headed for the steepest three-day gain since the middle of July amid signs of a slowdown in sales by overseas investors. Global funds sold $67 million of Indian shares on Friday, the smallest withdrawal in three weeks, data compiled by Bloomberg show.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Chan Tien Hin