HONG KONG: Asian stocks struggled on Tuesday as investors nervously await key political events later in the week, with the sacked former FBI chief to give testimony to Congress and Britain holding a general election.
After enjoying a healthy rally in recent weeks, traders on most markets took their cash off the table ahead of Thursday’s events.
The crisis over Donald Trump’s possible ties to Russia could come to the fore when James Comey appears on Capitol Hill, a month after the president fired him midway through a probe into the allegations.
The Russia question, and the country’s possible interference in November’s US elections, has hung over the tycoon’s head since taking office — leading to calls for his impeachment.
There are concerns on trading floors that Trump’s economy-boosting agenda — big infrastructure spending, tax cuts and deregulation — could be derailed. Hopes for the stimulus helped drive a months-long global markets rally after his election.
Comey’s evidence will come as Britain votes in a snap election, with Prime Minister Theresa May’s seemingly insurmountable lead slashed — fuelling fears of fresh uncertainty and of major difficulties in negotiations to leave the EU.
“There is a strong sense of wanting to wait and see among investors ahead of former FBI director Comey’s testimony and the UK elections,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.
Tokyo ended one percent down on a stronger yen and profit-taking after hitting near two-year highs Friday.
Sydney shed 1.5 percent and Singapore slipped 0.1 percent. Taiwan, Manila and Jakarta were also all down.
But Hong Kong edged up 0.5 percent to its highest close since July 2015 and Shanghai added 0.3 percent.
On currency markets the dollar retreated on nervousness over Comey and data which showed slowing growth in the US services sector last month.
Oil prices edged down after Monday’s losses as dealers looked past a decision by Saudi Arabia, the United Arab Emirates and Egypt to severe ties with Qatar, citing its support for terrorism.
Analysts said they doubted whether the move would affect OPEC production. But Greg McKenna, chief market strategist at AxiTrader, said it “has certainly increased geopolitical tensions in the region and could be a signal of the escalating tensions between the US and Iran as well”.
Iran is an ally of Qatar while Trump last month reiterated his support for Saudi Arabia.
In early European trade London was flat, Paris fell 0.6 percent and Frankfurt lost 0.4 percent.