Asian Stocks Decline After Four-Day Gain as Japan Shares Retreat

(Bloomberg) -- Asian stocks retreated, following a four-day rally in the regional equities gauge, as energy producers and banks led declines and a stronger yen weighed on shares in Tokyo.

The MSCI Asia Pacific Index dropped 0.5 percent to 130.07 as of 4:06 p.m. in Hong Kong. Japan's Topix index slipped 0.4 percent as the yen strengthened against all 31 major peers. Australian shares declined as the central bank maintained interest rates at a record low and as investors awaited results from weekend elections. Financial shares slumped as the possibility of bank bailouts in Italy gave investors further cause for caution in the wake of the U.K.'s vote to leave the European Union.

Asian equities retreated after climbing 4.2 percent over the previous four days, erasing declines since last month's Brexit vote as speculation grew that central banks will step forward with stimulus measures. Australia's central bank stood pat on interest rates, remaining impervious to the country's unclear election result as it awaits inflation data due later this month to assess its next move.

“We've got elevated risk levels around the world,” Ric Spooner, a Sydney-based chief market analyst at CMC Markets, told Bloomberg TV. “It seems very unlikely that we are going to get any real clarity on the big issues surrounding Brexit and the survivability of Europe for some months.”

Australia's S&P/ASX 200 Index slid 1 percent as vote counting resumed. Reserve Bank of Australia Governor Glenn Stevens and his board left the cash rate at 1.75 percent Tuesday, as forecast by every economist surveyed by Bloomberg. Policy makers have left borrowing costs unchanged for the past two months after easing in May in response to weak first-quarter consumer-price growth.

The Laggard

The Topix dropped for the first time in three days. While most Asian markets have recovered or are close to recouping their losses from Brexit, Japan is still more than 3 percent away from its pre-referendum level. The Topix index is down 19 percent this year amid a strengthening yen. Profit estimates at exporters from Nissan Motor Co. to Canon Inc. were cut by analysts after the referendum vote pushed up the Japanese currency, paring the value of income from overseas.

South Korea's Kospi index dropped 0.3 percent while Singapore's Straits Times Index and India's S&P BSE Sensex Index each fell 0.4 percent. The MSCI Emerging Markets Index lost 1 percent, ending a five-day rally.

New Zealand's NZX 50 Index rose 0.4 percent, climbing for a seventh straight day along with shares in Vietnam, where the benchmark index rose 0.5 percent to the highest level since 2008. The Shanghai Composite Index added 0.6 percent to close above 3,000 for the first time in more than two months amid speculation the central bank will take steps to boost the economy.

Hong Kong's Hang Seng Index lost 1.5 percent and the Hang Seng China Enterprises Index fell 1.8 percent.

China Vanke Co. tumbled by the 10 percent daily limit in Shenzhen for a second day following a six-month trading suspension. The property developer's board last week declined to hold an extraordinary general meeting called by units of its largest shareholder to remove almost all directors. Vanke's shares traded in Hong Kong were up 1.2 percent, the third straight day they have risen.

Fast Retailing Co. slid 4.2 percent in Tokyo after the company released June sales figures for its Uniqlo casual-wear chain. The retailer accounts for the biggest weighting on the Nikkei 225 Stock Average, which dropped 0.7 percent.

For a Gadfly commentary piece on Fast Retailing's quick expansion, click here.

Oil producers fell across the region as West Texas Intermediate for August delivery traded at $47.60 a barrel on the New York Mercantile Exchange, down $1.39 from Friday's close. There was no settlement Monday because of a holiday in the U.S. Cnooc Ltd., China's biggest offshore oil and gas producer, dropped 1.9 percent in Hong Kong. Inpex Corp. slipped 1.2 percent in Tokyo.

Futures on the S&P 500 Index fell 0.6 percent from Friday levels before U.S. markets resume trading following Monday's Independence Day holiday.

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, Tom Redmond