Asia: Stocks little changed as investors weigh data, rate hike

[TOKYO] Asian stocks were little changed, poised for the biggest monthly drop since January, as investors assessed economic data and the prospects for higher US interest rates.

The MSCI Asia Pacific Index rose less than 0.1 per cent to 128.28 as of 9:16 am in Tokyo. The gauge is down 2.2 per cent this month, the worst showing since an 8 per cent plunge in January, amid investors' anxiety over the US central bank's plan to raise interest rates.

"While keeping an eye on US monetary policy, market participants will also be looking at which way the market could go next," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co in Tokyo.

The yen traded at 110.82 per US dollar, after weakening Monday following Federal Reserve Chair Janet Yellen's remarks last week that an improving American economy would probably warrant another rate increase "in the coming months."

Financial markets in the US and UK were closed on Monday for a public holiday. The Fed's rate outlook continued to occupy investors, with traders putting odds of a hike in July at more than 50 per cent.

Japan's Topix index declined less than 0.1 per cent after reaching the highest level in a month on Monday. Prime Minister Shinzo Abe wants to put off a planned sales tax increase for 2-1/2 years, senior officials from his ruling party and its coalition partner said Monday, as Mr Abe prepares to end the speculation that has swirled for months.

Data from Japan on Tuesday showed that Japan's jobless rate for April was 3.2 per cent, in line with forecasts. The job-to-applicant ratio rose to 1.34, beating expectations and rising to its highest since 1991.

Overall household spending fell 0.4 per cent, less than forecasts. Preliminary data on industrial production showed that output expanded 0.3 per cent last month, beating expectations of a contraction.

Investors in Asia have been whipsawed this year, with the regional gauge slumping 14 per cent through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for higher US borrowing costs. It then rallied almost 20 per cent through this year's peak in April before retreating again.

Australia's S&P/ASX 200 Index dropped 0.5 per cent on Monday.

New Zealand's S&P/NZX 50 Index increased 0.1 per cent, climbing for a fifth straight day, while South Korea's Kospi index dropped 0.2 per cent.

Futures on Hong Kong's Hang Seng Index added 0.2 per cent, while those on the Hang Seng China Enterprises Index of mainland firms listed in the city climbed 0.5 per cent. The Shanghai Composite Index was little changed on Monday.

BLOOMBERG