Asia stocks fall on mounting U.S. fiscal concerns; Nikkei down 0.61%

Investing.com - Asian stocks fell on Tuesday as investors worldwide retreated from risk to take shelter in safe-haven yen and dollar positions over fears the U.S. may fall into an avoidable recession next year.

During Asian trading on Tuesday, Hong Kong's Hang Seng Index was down 0.93%, Australia's S&P/ASX200 was down 1.14%, while Japan’s Nikkei 225 Index was down 0.61%.

At the end of this year, the Bush-era tax cuts and other tax benefits expire at the same time pre-programmed cuts to government spending are scheduled to take effect, a combination known as a fiscal cliff that could send the country into recession next year if left unaddressed by Congress.

If untreated, the fiscal cliff could siphon over USD600 billion out of the U.S. economy next year alone in the form of rising taxes and cuts to government spending.

Lawmakers have expressed confidence that they'll avoid partisan bickering and cut a deal, but until an announcement hits the wire, investors will remain wary.

Even if a deal is struck, uncertainty as to how much individuals and businesses will be paying in taxes next year could avert investors from equities between now and year end, which had investors on edge across Asia.

Uncertainty in Europe also pushed equity prices down.

Greece recently approved a budget for next year and also pushed through politically unpopular budget cuts and tax hikes, both requirements for the country to tap a EUR31.5 billion tranche of financial aid.

Eurozone finance ministers met earlier to review the details of Greece's progress but have yet to free up the money for Athens, which sent investors snapping up safe-haven dollar and yen positions amid a session that saw muted appetite for risk.

Eurozone finance ministers have given Athens two years to meet austerity targets though the country is quickly running out of funding and will need a tranche of aid soon.

Eurozone policymakers are scheduled to meet again to discuss Greece's finances on Nov. 20.
Greece should not default until then as it can roll over debts in the meantime.

Once approved, the next shot of financial aid will end shorter-term solvency issues for Greece, but the country and creditors must still agree on ways to lower longer-term debt burdens, which dampened spirits.

Meanwhile in Japan, sluggish demand for exports abroad took its toll on the Japanese economy.

Japan's gross domestic product shrank by an annualized 3.5% in the third quarter of this year.

In Hong Kong, top decliners included Esprit Holdings, down 4.23%, New World Development, down 2.70%, and China Petroleum and Chemical, down 2.72%.

In Australia, top decliners included Cudeco, down 14.10%, FKP Property Group, down 9.87%, and Lynas Corp., down 8.33%.

European stock futures indicated a lower opening.

France's CAC 40 futures pointed to a loss of 0.48%, while Germany's DAX 30 futures pointed to a loss of 0.44%. Meanwhile in the U.K., FTSE 100 futures were down 0.27%.

Dow Jones Industrial Average futures were down 0.40%, while the S&P 500 futures were down 0.45%.

Later in the day, New Zealand is to publish official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic activity.

The U.S., meanwhile, is to release official data on the federal budget balance.