Most Asia markets stumbled on Tuesday, with shares in Australia falling amid an uncertain election outcome and an on-hold central bank. But mainland China shares rose as data showed services activity grew in June.
In Japan, the Nikkei 225 dropped 106.47 points, or 0.7%, to 15,669.33
In Hong Kong, the Hang Seng Index retreated 308.48 points, or 1.5%, to 20,750.72
The Japanese yen, considered a haven asset, strengthened against the dollar, trading at 101.95 U.S. on Tuesday, after the pair traded as high as 103.39 on Friday.
Japanese automakers finished mixed; shares of Toyota closed up 0.5%. Nissan shares were up 0.2% Honda was down 1.1%, Mazda off 2.7% and Yamaha Motor down 0.9%. .Mitsubishi Motors shares fell 4.1% while Isuzu Motors was up 1.7%
In a note, Deutsche Bank analysts said they have upgraded Nissan shares from hold to a buy rating, while maintaining Toyota's buy rating at lower price targets. Despite facing currency headwinds from a stronger yen, Toyota remains an industry leader and has attractive value.
Credit Suisse downgraded Mitsubishi Motors from neutral to underperform. Earlier in April, the Japanese automaker admitted to falsifying fuel economy test data to make emissions levels look more favourable.
Credit Suisse also upgraded Isuzu Motors from neutral to outperform; analysts said they favor Isuzu due to "its strong position in key local markets such as Thailand and commercial vehicles in Japan."
Australian markets also fell, dragged by the heavily-weighted financials sub-index, which fell 1.3%
Down under, major Australian banks were pressured, with shares of National Australia Bank closing down 1.6% Analysts told media outlets the ongoing political uncertainty in Australia was weighing on the future of the big banks.
The country faces an apparent political deadlock, after a federal election at the weekend failed to produce a clear winner. Incumbent Prime Minister Malcolm Turnbull said on Tuesday it would be a few more days before vote counting concludes, adding that he would work harder to regain the trust of citizens.
Continued political and economic uncertainty could see the country move closer to losing its vaunted triple-A credit rating.
The Reserve Bank of Australia (RBA) kept its monetary policy unchanged in a move that was widely expected. In its policy statement, the central bank cited low inflation and overall decent economic growth for keeping its key cash rate unchanged at 1.75%.
The Australian dollar had a muted reaction to the RBA decision, briefly touching a session high of $0.7543 U.S. before moving back to its pre-decision levels. Late Tuesday afternoon, the Aussie traded at $0.7505, after dropping to levels near $0.7438 U.S. on Monday amid the uncertainty around the election outcome.
CHINA
The Shanghai CSI 300 eked forward 2.68 points, or 0.1%, to 3,207.38
A private survey of small and medium companies in China showed activity in the services sector grew at a quicker pace in June. The Caixin services Purchasing Managers' Index (PMI) for June was at 52.7, compared with 51.2 in May, marking the fastest increase in 11 months. Levels above 50 indicate expansion.
In other markets
In Korea, the Kospi backpedaled 5.45 points, or 0.3%, to 1,989.85
In Singapore, the Straits Times Index moved downward 5.89 points, or 0.2%, to 2,864.67
In Taiwan, the Taiex index deleted 44.51 points, or 0.5%, to 8,716.07
In New Zealand, the NZX 50 gained 30.04 points, or 0.4%, to 6,970.99
The ASX 200 slid 53.78 points, or 1%, to 5,228
