Asian Stocks Drop on Concerns Over ‘Hard’ Brexit, U.S. Policies

  • Japanese shares extend decline as yen strengthens for 7th day
  • China’s Shenzhen Composite Index extends yesterday’s losses

Asian shares declined for a third day as caution dominated the market amid uncertainties surrounding the so-called hard Brexit and Donald Trump’s policies.

The MSCI AC Asia Pacific Index fell as much as 0.5 percent in morning trading, led by Japanese stocks. China’s Shenzhen Composite Index, which fell as much as 6.1 percent yesterday, fell for the sixth consecutive day.

The U.K. is likely to pull out of the European Union’s single market for goods and services and seek a new trading relationship with the bloc, Prime Minister Theresa May will say Tuesday, according to a person familiar with the matter. Separately, the International Monetary Fund is taking a cautious stance on the effects of a Trump administration.

“Trump’s policies and Brexit remain two key overhangs in Asia markets,” said Ronald Wan, chief executive officer at Partners Capital International in Hong Kong, “Investors may become more risk-averse and choose assets that could hedge these risks -- commodities like crude oil, gold may be preferred in the short term.”

Highlights

  • Topix -0.7%, Nikkei 225 -0.6% as yen strengthens to 114.05/USD
    • Bullish expectations on Trump policies and the BOJ’s purchase of ETFs may support share prices in Japan in the short term, but the upward trend may end in mid-2017: Sumitomo Mitsui Trust Bank Limited strategist Ayako Sera
    • Nikkei 225 is “overvalued,” Sera says
  • Shenzhen Composite Index -0.4%
  • Hang Seng Index +0.4%, Hang Seng Composite Index +0.6%, Hang Seng China Enterprises Index +0.3%
  • Gold spot +0.3% to $1,205.83/oz
  • Samsung Electronics +2%; Samsung succession in disarray as Lee criminal case advances
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