Asia stocks lower on Italy election uncertainty; Nikkei drops 2.3%

Investing.com - Asian stock markets were broadly lower during late Asian trade on Tuesday, as appetite for riskier assets weakened after signs of an inconclusive general election in Italy.

During late Asian trade, Hong Kong's Hang Seng Index fell 1.3%, Australia’s ASX/200 Index ended down 1%, while Japan’s Nikkei 225 Index tumbled 2.3%.

U.S. stock markets suffered their worst daily loss since November on Monday as Italy’s election results began pointing to an inconclusive result.

Italy’s center-left party led by the Democratic Party's Pier Luigi Bersani won the majority of votes in the lower house, the chamber of deputies, and was likely to receive the mandate to form a government.

However, projections indicated that no party would be able to form a majority in the upper house or Senate, which could send Italy back to the polls.

The news prompted investors to shun riskier assets such as stocks and commodities and move in to safe-haven assets like the U.S. dollar and the yen.

In Tokyo, the Nikkei retreated from the previous session’s 53-month closing high as the yen rallied against the euro, weighing on exporters with high exposure to Europe.

Automakers Mitsubishi and Honda lost 3.8% and 3.1% respectively, while Sony and Nikon fell 3.7% and 3.4%.

Japanese megabanks were also lower, with stocks of the nation’s largest lender Mitsubishi UFJ Financial Group retreating 1.5%, while Sumitomo Mitsui Financial Group and Mizuho Financial Group declined 1.7% and 1.4% respectively.

Meanwhile, in Hong Kong, the Hang Seng came under pressure amid concerns that China may step up monetary tightening efforts.

The China banking sector were among the biggest drags on the index, with China Construction Bank shares dropping 2.1%, Industrial and Commercial Bank of China falling 1.8% and Bank of China declining 2.2%.

Index heavyweight HSBC Holdings saw shares slump 1.1%. Shares of HSBC command a 15% weighting on the Hong Kong benchmark, making it the single largest constituent on the index.

Elsewhere, in Australia, the benchmark ASX/200 Index moved further away from last week’s four-and-a-half-year closing high, as miners came under pressure amid concerns over the global economic outlook.

BHP Billiton and Rio Tinto lost 1.5% and 0.9% respectively, while iron ore producer Fortescue Metals Group declined 3%.

Looking ahead, European stock market futures pointed to a lower open, amid concerns that Italian election results could threaten economic reforms and reignite financial instability in the euro zone.

The EURO STOXX 50 futures pointed to a loss of 0.2% at the open, France’s CAC 40 futures shed 0.2%, London’s FTSE 100 futures dipped 0.1%, while Germany's DAX futures pointed to a drop of 0.4% at the open.  

Market participants were looking ahead to congressional testimony from Federal Reserve chief Ben Bernanke later in the trading day, after last week’s minutes of the central bank’s January meeting showed that some policymakers favored an early end to the Fed's monetary easing measures.