European stocks fell from a three-week high, while demand for haven assets including US Treasuries and gold rose.
The Australian and New Zealand dollars sank as speculation mounted that their central banks will cut interest rates as soon as next month.
The Stoxx Europe 600 Index retreated 0.4 per cent as of 8:12 am in London, following equity declines in Hong Kong and Singapore.
The Aussie tumbled one per cent as the Reserve Bank of Australia said the jobs market was losing momentum amid weak inflation.
The kiwi lost ground against all 31 major peers after policy makers moved to rein in the nation’s housing boom, clearing an obstacle to lowering borrowing costs.
Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1 percent in the first quarter of 2017, lower than any of the 61 estimates in a Bloomberg survey.
Policy makers are under pressure to unleash stimulus as the global economic outlook shows signs of worsening.
The International Monetary Fund is due to update its projections for world growth on Tuesday and Managing Director Christine Lagarde warned last week that estimates may be cut.
Nonetheless, global equities have recovered to above where they were at the time of the UK's vote to leave the European Union and the US earnings season has so far delivered more positive surprises than negative ones.
"The market is taking a pause," said Tony Farnham, a strategist at Paterson Securities in Sydney.
“There isn’t much of a catalyst out there. People are starting to question if there’s still value in the market following the post-Brexit rally,” he said.
US data on Tuesday are forecast to show housing starts were little changed in June from the previous month, while companies due to report quarterly results include Goldman Sachs Group Microsoft Corp. and Johnson and Johnson.
Turkey’s central bank is seen lowering its overnight lending rate by a quarter of a percentage point at its first policy review since a failed coup over the weekend.
Economists were predicting a half-point reduction prior to the attempted takeover by some of the military, a Bloomberg survey showed.
StocksMining companies led losses on the European share measure, with Rio Tinto Group sliding 2.1 per cent in London after reporting that second-quarter iron-ore production rose a weaker-than-expected 7 per cent.
The MSCI Asia Pacific excluding Japan Index fell 0.4 per cent, with benchmark gauges in Hong Kong and Singapore losing at least 0.5 per cent.Japan's Topix index rose 1.1 per cent from Friday's close, buoyed by Monday's slide in the yen.
SoftBank Group Corp. tumbled 10 per cent, its biggest loss since 2012, after agreeing to pay $32 billion for ARM.
The UK-listed chipmaker was little changed after soaring 41 per cent on Monday.
Futures on the SandP 500 Index declined 0.2 per cent, after the gauge closed at a record high.
“On current sentiment it seems likely that any pullbacks will be shallow and a buying opportunity,” said Chris Weston, chief market strategist at IG in Melbourne.
“We will need to see good earnings, or the market is at risk of rolling over.”
Currencies
The Aussie slipped one per cent to 75.16 US cents, after strengthening in each of the last seven weeks.
Minutes published Tuesday from the RBA’s July 5th policy meeting showed that the central bank estimated the economy to have slowed last quarter and policy makers were concerned about currency appreciation.
The likelihood of an August rate cut has increased to 56 per cent from 45 per cent over the past week, derivatives indicate.
Gold rose from a two-week low, while copper declined 0.1 per cent in London.
US Treasuries due in a decade gained for the first time in four days, pushing their yield down by three basis points to 1.56 percent. The yield reached 1.60 percent in the last session, the highest it’s been since June 24th when the Brexit vote count was announced.
Similar-maturity bonds in Australia also advanced, cutting their yield by seven basis points to 1.92 per cent.
New Zealand’s yield fell seven basis points to 2.26 per cent.
The cost of protecting Asian bonds against default using credit-default swaps dropped to an 11-month low, according to Markit iTraxx Asia index prices compiled by Australia and New Zealand Banking Group and data provider CMA.
Bloomberg
