China: Tokyo led losses across most Asian markets Monday as Japanese Prime Minister Shinzo Abe’s political future hangs in the balance over a cronyism scandal, while traders await a crucial US Federal Reserve meeting.
After fluctuating last week on worries about a possible global trade war and Donald Trump’s removal of moderate voices in his Cabinet, regional equities are struggling to maintain a run of gains.
Investors are also keeping an eye on Washington after another outburst by Trump against a probe by special counsel Robert Mueller into claims of Russian meddling and collusion with the tycoon’s campaign in the 2016 presidential election.
There are worries in some quarters Trump is planning to fire Mueller. Greg McKenna, chief market strategist at AxiTrader warned if he did then “all heck could break loose on markets”.
In Japan, the Nikkei ended the morning session 0.9 percent lower as Abe and Finance Minister Taro Aso are embroiled a scandal over the cut-price sale of government land to a supporter of the prime minister to open an elementary school.
The finance ministry has admitted to altering documents related to the deal.
A weekend poll by the Asahi Shimbun daily found public support nosediving 13 percentage points from a month ago to 31 percent, the lowest since Abe took power in December 2012.
Abe denies any wrongdoing.
Among other markets Shanghai was marginally lower, with investors seemingly unmoved by news that reformer and US-educated Yi Gang was the only nominee to take over as governor of the People’s Bank of China.
Yi recently said the central bank would work to push through reforms that will bring about “equal treatment for domestic and foreign investors”.
Hong Kong was up 0.3 percent but CK Hutchison Holdings was down more than one percent after the city’s richest person and investment “Superman” Li Ka-shing said Friday he would step down as chairman.
CK Asset Holdings fell 2.7 percent.
Elsewhere Sydney added 0.3 percent, but Singapore fell 0.1 percent, Seoul dropped 0.3 percent and Manila lost 0.7 percent. There were also losses in Jakarta and Wellington.
The key event this week is the Fed’s next policy meeting, which will be the first for new boss Jerome Powell. The bank is expected to lift interest rates again but Powell’s remarks will be closely followed for clues about future increases with some predicting another three this year in light of an improving economy.
“Markets are struggling to stay positive given the torrents of potential headwinds. Whether it’s the White House revolving door, an escalation of a global trade war or Japan’s brewing political scandal, markets are grappling to find an equilibrium,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“But when you toss in the prospect of a more hawkish Fed, it’s not surprising risk sentiment continues to trade poorly.”
Key figures around 0300 GMT
Tokyo – Nikkei 225: DOWN 0.9 percent at 21483.22 (break)
Hong Kong – Hang Seng: UP 0.3 percent at 31,584,05
Euro/dollar: DOWN at $1.2268 from $1.2286 at 2100 GMT on Friday
Pound/dollar: DOWN at $1.3930 from $1.3936
Dollar/yen: DOWN at 105.80 yen from 105.97 yen
Oil – West Texas Intermediate: DOWN 33 cents at $62.01 per barrel
Oil – Brent North Sea: DOWN 32 cents at $65.89 per barrel
New York – Dow: UP 0.3 percent at 24,946.51 (close)
London – FTSE 100: UP 0.3 percent at 7,164.14 (close)