Asia: Stocks mostly lower amid worries on Italy referendum, OPEC

Asia stocks were mostly lower on Tuesday as investors exercised caution ahead of Italy’s referendum and as oil prices fell on doubts of an OPEC deal to curb production.

Japan’s Nikkei 225 fell 0.27% to 18,307.04 points, Hong Kong’s Hang Seng index dropped 0.41% to 22,737.07 points while the Shanghai composite rose 0.18% to 3,282.92 points.

On 4 December, Italians will be asked to decide whether to accept a package of constitutional reforms put forward by centre-left Prime Minister Matteo Renzi, who has said he would resign if the proposals are rejected.

Market participants are concerned that if this results in a 'no' vote, political uncertainty will ensue, making the task of sorting out non-performing loan issues at the country’s banks even more difficult.

Meanwhile, traders are also worried that OPEC will fail to reach a deal to limit production to bolster prices. Brent crude was down 1.8% to $47.38 per barrel and West Texas Intermediate declined 1.9% to $46.21 per barrel at 1021 GMT.

In currency markets, a stronger yen against the dollar hurt sentiment among exporters in Japan. The yen fell 0.53% versus the dollar.

The dollar has recently rallied on the back of US President Donald Trump’s policies. Optimism that Trump will boost fiscal stimulus and sharply cut corporate taxes has also provided a few weeks of overall gains in Asian equities.

Deutsche Bank said Trump’s polices have opened the door for a large fiscal stimulus that is expected to bolster US economic growth.

“The shift toward a more balanced mix of easy monetary and fiscal policy and looser regulation is expected to jumpstart the economy, ending years of low growth and inflation,” the bank said.

“Faster US growth would also have positive spillovers to the rest of the world. Risks remain that some of these growth-friendly policies are not implemented or have unexpected effects.

However, Deutsche Bank said the biggest threat to growth is a “possible protectionist turn, which would further depress already anaemic global trade”.