Asian Shares Down on Italian Referendum Jitters

Stock markets in Asia fell early Monday, as investors feared the "no" vote in Italy's referendum on Sunday could hurt the country's banking system and lead to global contagion.

Italian Prime Minister Matteo Renzi offered to resign after conceding defeat in the vote on constitutional reform, sending investors toward safe-haven assets.

The "no" vote could prop up the antiestablishment 5 Star Movement, which has called for a referendum on Italy's euro membership. It has also advocated breaking away from European Union budget strictures, and moving toward printing a parallel currency.

Declines in Japan banking stocks led a 0.6% decline in the Nikkei Stock Average. Australia's S&P/ASX 200 was down 0.9% and Korea's Kospi was in negative territory.

"The result of the Italian referendum definitely spooked the market this morning," said Gary Huxtable, a client adviser at Atlantic Pacific Securities. "Investors were always going to sell at any sign of uncertainty."

Rising political uncertainty in the European Union's fourth-largest economy could increase pressure on the country's banks, investors said. Banking stocks across the region declined on worries of any spillover impact on Asia.

In Japan, the Topix subindex tracking banks fell 1.8%, with Mitsubishi UFJ Financial off 2.6%, T&D Holdings down 1.7% and Sumitomo Mitsui Financial down 2%. In Australia, the Australia & New Zealand Banking Group fell 1.1% and Macquarie slid 2.2%.

"It is well known that a number of Italian banks have sizable bad loans on their books, Monte dei Paschi di Siena being the most well-known case," said Alex Furber, a sales trader at CMC Markets. "There are huge question marks over whether the government can prop up banks if they fail."

Taiwan's benchmark Taiex opened higher, bucking the region's declines, but the gain was short-lived. The index was last down 0.3%.

Hong Kong's Hang Seng Index was lower by 0.2% and the Shanghai Composite fell 0.9%. The much-anticipated trading link connecting the Shenzhen and Hong Kong stock exchanges launched Monday.

Separately, the S&P 500 posted its first weekly decline since Mr. Trump was elected president. The index closed flat on Friday but was in positive territory, with the Dow Jones Industrial Average ending 0.1% lower.

Deborah Ball, Giada Zampano contributed to this article.

Write to Kenan Machado at [e-mail]

(END) Dow Jones Newswires

December 04, 2016 22:25 ET (03:25 GMT)

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