Asian stocks slid in early trade on Tuesday, as financial markets waited on a rush of key US economic data delayed by the government shutdown while investors rolled back bets of a Federal Reserve (Fed) rate cut next month.
Traders are looking to the US data to provide clues on the health of the world's largest economy, with the closely watched September non-farm payrolls report due on Thursday.
Focus in the region was also on Japan's new Prime Minister Sanae Takaichi's meeting with Bank of Japan (BOJ) governor Kazuo Ueda at 0630 GMT, the first discussions to be held between the pair since the new leader was inaugurated last month.
"There will be interest in the outcome of the meeting, given Takaichi's reputation as an advocate of easy monetary policy and fiscal policy and the market wondering when, or if, the BOJ will tighten policy over coming months," JBWere analysts said in a research note on Tuesday.
Ueda has signalled the chance of an interest rate hike as soon as next month. But Takaichi and her finance minister, Satsuki Katayama, have made clear their preference for rates to remain low until inflation durably meets the BOJ's 2% target.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.7% while Japan's Nikkei was off more than 2%.
The early weakness in regional stocks tracked an extended sell-off on Wall Street overnight as benchmark Treasury yields inched lower with markets braced for a flood of economic data releases.
Chipmaker Nvidia's quarterly earnings on Wednesday are also eagerly anticipated as investors look for signs of weakening in a sector that has driven much of the stock market's rally over recent months.
During the US government's longest shutdown in history, traders were left to grapple with the question of whether the Fed would cut rates again at next month's meeting.
"Global equity markets have adopted a cautiously defensive tone ahead of the US non-farm payrolls and key corporate earnings," said Besa Deda, the chief economist of William Buck, the advisory firm in Sydney.
"The payrolls report is expected to provide much-needed insight into the underlying strength of the US economy and should shape expectations for the Fed's next move. A Fed rate cut in December is not a done deal."
"November has brought greater volatility to global equity markets. Unlike October, most major indices have stalled, failing to push on to new record highs."
Investors have trimmed expectations of a Fed cut next month, despite signs of further weakness in the US economy from recent private-sector data. Markets are now pricing in closer to a 40% chance of a 25-basis-point Fed rate cut in December, down from more than 60% earlier this month.
In the foreign exchange market, the dollar held firm. The dollar index, a measure of the US currency against major rivals, was last up 0.2% at 99.545, snapping a four-day losing streak to reclaim a one-week high.
The dollar edged as much as 0.1% higher against the yen to 155.29, the Japanese currency's weakest level since Feb 4 this year.
The recent moves in the yen have raised concern in Japan over the negative implications for the economy, and at a regular news conference on Tuesday Japanese Finance Minister Satsuki Katayama said she was "alarmed" at volatility in the currency.
Gold was down 0.3% to US$4,030 an ounce, while Brent crude futures slipped almost 0.5% in the Asian morning to US$63.91 a barrel.
Bitcoin ticked up 0.3% after falling to a seven-month low of US$91,174.66 earlier in the session, with losses of nearly 22% over three months.
Source: theedgemalaysia