Equity markets across Asia were lower early Tuesday, tracking overnight declines in the U.S., as cautious investors looked ahead to elections in the U.K. and a European Central Bank meeting.
Investors are also looking for any fallout from former U.S. Federal Bureau of Investigation Director James Comey’s public testimony about alleged Russian interference in the 2016 election. Mr. Comey’s testimony is scheduled for Thursday, as are the U.K. elections and the ECB meeting.
Australia’s S&P/ASX 200 was recently down 1%, while Japan’s Nikkei Stock Average was off 0.6%. In China, the Shanghai Composite Index was flat.
“The market sentiment remains very fragile,” said Masashi Murata, a senior currency strategist at Brown Brothers Harriman. “We can’t expect the U.S. to grow at over 3% this year, at least under the Trump administration, in the middle of political scandals.”
President Donald Trump won’t block Mr. Comey from testifying before Congress. That clears the way for him to face questions about whether he felt pressured to slow or halt the FBI’s investigation.
In currencies, the U.S. dollar declined, with beneficiaries of the so-called Trump reflation trade reversing gains made since November.
The WSJ Dollar Index, a measure of the dollar against 16 other currencies, was down 0.2% at 88.16, at levels close to those on Nov. 8, before Mr. Trump’s victory sent the dollar soaring. The dollar was also down 0.2% against the euro and the pound.
“That [Comey testimony] is pretty much the focus on the greenback with a little bit of risk aversion coming into play,” says Stephen Innes, head of trading in Asia for forex broker Oanda.
The yen accelerated its gains against the dollar with the dollar-yen pair down 0.5% at Yen109.85. That weighed on the Nikkei.
In Japan, shares of heavy equipment makers–which had benefited from expectations for greater infrastructure spending in the U. S.–were down, with Komatsu 2% lower, Hitachi Construction falling 2.3% and Kubota losing 1.6%.
Meanwhile, oil prices fell in Asia after a volatile session the previous day. Though off from a one-month low, prices for Brent crude were down 0.6% at $49.17 a barrel.