Asia: Stocks fall second day as yen weighs on Japanese shares

[SYDNEY] Asian stocks were on course for a second day of declines as the yen held gains against the US dollar, weighing on Japanese equities before a meeting of Opec and a monthly US jobs report.

The MSCI Asia Pacific Index slid 0.3 per cent to 128.48 as of 9:02 am in Tokyo. Japan's Topix index slipped 0.8 per cent after dropping 1.3 per cent on Wednesday.

The yen strengthened against the US dollar by the most in more than a month after Prime Minister Shinzo Abe said he would postpone an increase in the nation's sales tax.

"There's now less chance of more Japanese monetary policy particularly when Abe said he's thinking about doing more fiscal initiatives," Tony Farnham, Sydney-based analyst at Patersons Securities Ltd, said by phone.

"That should have the US dollar on the back foot for a period of time. There's certainly nothing in the Beige Book to say the Fed is cowering away from a rate increase."

In its Beige Book assessment of regional economic conditions, the Federal Reserve said the US economy expanded at a modest pace across most of the country since mid-April, causing the labour market to tighten as employers continued adding jobs and nudging wages higher.

The S&P 500 closed little changed as stronger American factory data contrasted evidence of sluggish global growth.

Investors are looking ahead to Friday's American payrolls report as the Fed's next policy review looms. Traders are putting the odds of an interest-rate hike by July at more than 50 per cent. Investors are also watching developments out of Opec's gathering in Vienna, as crude slipped below US$49 a barrel.

Australia's S&P/ASX 200 Index was little changed and New Zealand's S&P/NZX 50 Index retreated 0.1 per cent. South Korea's Kospi index added 0.1 per cent after figures were revised higher for the nation's economic growth.

After Japan removed one uncertainty looming over the stock market with the postponement of a sales tax, analysts still differ on whether the decision signals a turnaround for the nation's shares. Researchers at Mizuho Securities Co and Okasan Securities Co were among those saying that more progress is needed from the government's stimulus efforts to boost equities.

Others were more optimistic that the economic benefits from increased spending will benefit shares in the longer term.

Futures on Hong Kong's Hang Seng Index and the Hang Seng China Enterprises Index both lost 0.2 per cent. Contracts on the FTSE China A50 Index also retreated 0.2 per cent.

Futures on the S&P 500 were little changed. The next major data point the Fed will consider comes Friday with the release of the government's monthly payroll data for May. The consensus among analysts is that the economy added fewer than 200,000 jobs for a second straight month. Fed officials meet June 14-15 to discuss policy, after Chair Janet Yellen said last week that a rate increase would be probably be "appropriate" in coming months.

BLOOMBERG