[TOKYO] Asian shares fell on Monday, uninspired after a downbeat day on Wall Street and led by a plunge in Japan's Nikkei after the dollar notched a fresh 18-month low against the yen.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 per cent, after Wall Street marked losses following a spate of disappointing earnings.
Adding to the subdued sentiment, a survey released on Sunday showed that activity in China's manufacturing sector expanded for the second month in a row in April but only marginally, raising doubts about the sustainability of a recent pick-up in the economy.
That weighed on Australian shares, which fell 0.6 per cent. Disappointing results from Westpac Banking Corp failed to help the mood.
Australia's central bank board will meet for a policy review on Tuesday and is widely expected to keep its cash rate at a record low of 2.0 per cent, though some economists expect a cut.
Markets in Hong Kong and China are closed on Monday.
Japan's Nikkei stock index skidded 3.6 per cent, as investors reacted to the yen's recent galloping gains.
"We've started the week with a precipitous drop in Japanese equity as the market responds to the strength of the yen," said Martin King, co-managing director at Tyton Capital Advisors.
Thin liquidity also amplified moves, as Japan is in the middle of its Golden Week series of holidays. Markets were closed on Friday, and will be closed on Tuesday, Wednesday and Thursday this week.
The dollar was slightly higher against the yen at 106.51 after earlier dropping as low as 106.20, its deepest trough since October 2014.
It logged its worst week against the yen since the 2008 financial crisis after the Bank of Japan decided not to muster fresh stimulus measures at its policy meeting last Thursday.
The euro edged up slightly to US$1.1466, while the dollar index, which tracks the greenback against a basket of six rival currencies, inched lower to 92.988.
"The start of the new month does not mean a new trend. The technical tone of the dollar is weak," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients. "The Federal Reserve acknowledges the continued improvement in the labour market. The problem is that it has not translated to stronger consumption, and business investment remains soft," Mr Chandler said. "Fed officials need more confidence that the six-month economic soft patch has ended."
On Friday this week, non-farm payrolls for April are expected to show a rise of 200,000.
A measure of factory activity in the US upper Midwest region remained in expansion territory for a fourth straight month, but fell in April. The latest data reinforced the view US gross domestic growth will remain sluggish following a 0.5 per cent first-quarter increase, which was the weakest in two years.
After raising interest rates in December for the first time in nearly a decade, the Fed held monetary policy steady last week. While it kept the door open to a hike in June, it gave no signals that it was in a hurry to tighten further given the economy's slowdown, even as the labour market has improved.
Crude oil futures slipped after hitting 2016 highs on Friday and finishing April trading about 20 per cent higher as fears of a global supply glut eased.
Analysts warned that the rally had been driven by investors holding large speculative positions, while oil stockpiles were still high, with a Reuters survey showing Opec output in April rising to its most in recent history.
Brent futures slipped 0.9 per cent to US$46.96 a barrel in Asian trading, after notching their best monthly gain in seven years, adding 21.5 per cent.
US crude futures were down 0.8 per cent at US$45.57 a barrel, after rising 20 percent last month, their biggest monthly gain in a year.
Spot gold was steady at US$1,291.90 an ounce, not far from its peak of US$1,296.11 on Friday, its highest level since January 2015.