Asia stocks fall ahead of German ruling, Fed; Nikkei ends down 0.7%

Investing.com - Asian stock markets retreated on Tuesday, as investors turned jittery ahead of a key German court ruling on whether the euro zone's permanent bailout fund is compatible with German law.

Market players are also looking ahead to the Federal Reserve’s next meeting, which will take place on September 12 and 13, for more clarity on the central bank’s monetary policy.

During late Asian trade, Hong Kong's Hang Seng Index shed 0.25%, Australia’s ASX/200 Index dipped 0.2%, while Japan’s Nikkei 225 Index ended down 0.7%.

Investors readjusted positions ahead of a closely-watched German court ruling scheduled for Wednesday, on the constitutionality of the European Stability Mechanism.

Germany’s approval will be necessary in order to implement the European Central Bank’s new bond-buying plan announced last week.

Markets are also looking ahead to the Fed’s next policy-setting meeting later in the week, amid mounting speculation the central bank will introduce another round of quantitative easing to stimulate growth in the U.S. economy.

In Tokyo, the Nikkei ended lower as a persistently strong yen and an uncertain global outlook continued to weigh on the nation’s exporters.

A strong yen undermines the value of Japanese exporters' overseas profits, and also makes Japanese shares less attractive to investors holding other currencies.    

Shares in automakers were lower, after a report showed China’s car sales in August came in below expectations for a second month. Toyota lost 1.7%, Nissan fell 0.95%, while Honda declined 0.25%.

Electronics maker Panasonic saw shares fall 1.65% after ratings agency Moody’s cut its credit ratings to Baa1 from A2, citing weak earnings and higher debt.

Shares in the technology sector came under selling pressure for a second day, after tech giant Intel cut its third-quarter sales forecast last Friday, citing weakening global demand.

Semiconductor maker Tokyo Electron slumped 2.35% while Advantest shares retreated 3.15%.

Elsewhere, in Hong Kong, the Hang Seng edged modestly lower, but remained supported by growing expectations of more stimulus measures to boost growth in the world's second biggest economy.

China’s government last week approved a USD157 billion infrastructure spending program to help stimulate the economy.

Chinese financials were mostly lower, with China Construction Bank shares trading down 1.8%, Industrial and Commercial Bank of China slumping 1.4% and Bank of China declining 0.7%.

Chinese oil and gas shares were higher, with Cnooc up 2.6% and PetroChina gaining 0.9% after China raised retail gasoline and diesel prices overnight.

Meanwhile, in Australia, the benchmark ASX/200 Index edged lower, as losses in miners weighed.

Shares in Newcrest Mining fell 1.2%, Rio Tinto declined 0.6%, while iron ore maker Fortescue Metals tumbled 5.1%.

Looking ahead, European stock market futures pointed to a mildly higher open. The EURO STOXX 50 futures pointed to a gain of 0.25% at the open, France’s CAC 40 futures added 0.45%, London’s FTSE 100 futures rose 0.35%, while Germany's DAX futures pointed to a rise of 0.35% at the open.  

Later in the day, the U.S. was to produce a report on trade balance.