Overnight

Oil prices have been in a swoon of late falling below $40 a barrel and Monday on Wall Street the trend continued affecting some say overnight trading in Asia Tuesday as shares there fell in early trading.

Tuesday is an important day also for another Asian central bank, the Reserve Bank of Australia, as it's policy board decides whether to cut rates or leave them where they are at 1.75 percent in an effort to head off low inflation and a rising currency. Last week investor eyes were focuses on the Fed and the Bank of Japan. Economists are not so good at predicting much of anything and interest rate cuts  or hikes are no exception. The majority are calling for a quarter percent, 25 basis point, cut when the meeting concludes. But recent upturns in things like manufacturing, business confidence and jobs might put a hold on such. Australian shares were off a fraction I nearly trading.

The Nikkei 225 dropped 0.8% as the yen strengthened against the dollar. The MSCI, the broadest index of Asian-Pacific shares  excluding Japan, edged lower 0.2% while Hong Kong  was shut down in light of Typhoon Nida threatening to come ashore. The Kospi was down 0.4%, the Shanghai composite was up 0.1%

In Japan, Prime Minister Shinzo Abe's cabinet is likely to approve a 28 trillion yen ($273 billion) stimulus package on Tuesday, though direct fiscal spending will total only about 7 trillion yen, according to two people briefed on the matter, according to Reuters.

Meanwhile, a warning from Japan's head bank regulator in the WSJ.

TOKYO—Japan had its financial crisis long before the West. A quarter-century of stagnation later, the country’s top bank regulator has a warning for his global counterparts: Overreacting to the bust could undermine the recovery.

“Supervisors’ emphasis on clean bank balance sheets...may have had side effects,” Nobuchika Mori said when asked in a recent interview with The Wall Street Journal what lessons he would offer from his country’s experience cleaning up a burst bubble.

“Looking back from today’s vantage point, we wonder if we should have done things differently, paying more attention to economic growth,” he said.

It is a contrast with the tone in Washington, where bank overseers continue to add capital requirements and other restrictions. The Federal Reserve and other regulators have defended the steps as necessary to keep the banking system safe. But critics in the industry say they are in some cases deterring banks from taking the risks and offering the credit needed to fuel faster economic activity.
 

Mr. Mori spent most of his career at Japan’s powerful Ministry of Finance, working in various divisions from international finance to national budget, before moving next door to the Financial Services Agency in 2006.

He became commissioner of the agency a year ago, making him the country’s top financial regulator. His one-stop-shop agency combines the functions of a broad range of American overseers, from the market monitoring of the Securities and Exchange Commission to the bank supervision of the Fed and the Office of the Comptroller of the Currency.

Crude oil bounced back 0.6% to $42.60 a barrel. Gold remained slightly changed Tuesday, still near its three-week high made last Friday at $1,355.10 ;partly on the growing expectations U.S. interest rate hikes have been tabled  for now. U.S. gold was flat at $1,359.8 an ounce.