By Shinichi Saoshiro
TOKYO (Reuters) – Asia stocks fell on Monday as investors scaled back expectations of an aggressive interest rate in the Federal Reserve, while crude oil prices rose on tensions in the Middle East after Iran's attack of a British tanker had been closed.
MSCI's widest index of Asia-Pacific shares outside Japan () was down 0.4%.
Japan's Nikkei () stopped 0.2% on more temperate Fed easing views and caution ahead of the domestic earnings season starting this week.
The Shanghai Composite Index () was down 1
Hong Kong's Hang Seng () fell 0.9%. South Korea's KOSPI () was flat.
In the early European trade, the pan-region Euro Stoxx 50 futures () up 0.06%, German DAX futures () increased 0.02% and the UK futures () rose 0.05%. 19659004] Global stock markets had risen shortly at the end of last week, after bold New York Fed comments increased by President John Williams (NYSE 🙂 expectations, the central bank would lower rates by 50 basis points (bps) at the July 30 to 31 meeting. July.
But the stock markets returned these gains on Friday, with Wall Street stock falling after the New York Fed went back Williams & # 39; comments by saying his speech was not about potential political action on the upcoming Fed meeting.
Expectations for a larger cut were scaled down even more after the Wall Street Journal reported that the Fed would likely cut rates by 25fps this month, and could make further cuts in the future with global growth and trade uncertainty.
"The possibility of a 50 bps cut has almost disappeared due to the WSJ report and the New York Fed's attempt to tone down previous Williams comments," wrote Kenji Yamamoto, economist at Daiwa Securities.
Dollars and US treasury dividends increased more likely for a lower decline.
The () against a basket with six main currencies was steady at 97,174 after increasing 0.4% on Friday.
The euro () was little changed to $ 1.11216 after cutting 0.5% on Friday. The greenback rises 0.25% to 108.00 yen
Reference point 10-year government return () stretched Friday's modest gains and climbed to 2.062%.
Nevertheless, the broad decline in stock markets limited the increase in safe haven Treasury yields.
"One factor that can lead stocks lower this week is tweets by US President Donald Trump on trade issues with China," said Junichi Ishikawa, senior forex Strategist at IG Securities.
"Shares may decline if he continues to challenge trade comments directed at China this week."
Trump maintained pressure on Beijing last week by renewing the threat of imposing tariffs on another $ 325 billion Chinese goods, even as hopes grew that the two sides could soon resume face-to-face negotiations to end their year long trade war.
OIL EXPENSES GAINS
In goods, Brent crude futures () were up 1.55% at $ 63.44 per barrel following an increase of about 0.9% on Friday.
On Friday, Iran's revolutionary guards captured a British flagged oil tanker in the Hormuzstream after Britain took an Iranian vessel earlier this month, increasing its tensions along an important international oil transport route.
US raw futures () advanced 0.77% to $ 56.06.
Gold sank from a six year high as the dollar strengthened and as expectations of a deep interest rate cut of the Fed was called back.