By Daniel Inman
Japanese stocks continued to be weighed down by a strong yen on
Tuesday, while shares in Sydney were slightly lower before the
Reserve Bank of Australia's policy meeting.
Australia's S&P/ASX 200 dropped 0.1% before the Reserve Bank
of Australia's rate decision, due to be announced later
Tuesday.
Expectations for lower interest rates are high, with all 15
economists surveyed by The Wall Street Journal forecasting a rate
cut. A quarter of a percentage-point reduction in rates would bring
the cost of borrowing to a record low of 2.5%.
The central bank has already slashed interest rates seven times
since late 2011, as a weakening mining sector has prompted policy
makers to use monetary policy to support growth in other parts of
the economy.
The Australian dollar (AUDUSD), which hit a three-year low
against its U.S. counterpart on Monday, was steady before the
announcement.
The U.S. dollar weakened against the yen (USDJPY) on Tuesday,
putting pressure on stocks in Tokyo. The greenback was at Yen98.05,
compared with Yen98.30 late Monday in New York. The Nikkei Average
dropped 1.1%
"The summer doldrums are upon us, with participation levels low
and trading incentives -- aside from earnings-related news --
relatively few," said Hiroichi Nishi, general manager of equities
at SMBC Nikko Securities.
Mitsubishi Materials Corp. rose 2.6% in Tokyo after the Nikkei
reported that its group operating profit for the first quarter is
believed to have risen more than 30% on year to about Yen15 billion
($153 million), driven by an improvement in its copper segment and
a weaker yen.
Also in Tokyo, Toshiba Corp. (TOSYY) outperformed the broader
market, down just 0.5% after a separate Nikkei report said that the
company plans to build a NAND flash-memory factory in a joint
venture with SanDisk (SNDK), with the total investment estimated to
be Yen400 billion.
South Korea's Kospi fell 0.7%.
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