Asian shares slip, US presidential debate awaited

Asian shares began the week under a cloud on Monday after losses on Wall Street, and as investors' attention turned from central banks to American politics ahead of the first US presidential debate.

MSCI's broadest index of Asia-Pacific shares outside Japan extended early losses and was down 0.7 per cent by midday, while Japan's Nikkei stock index fell a similar amount as the yen firmed.

Wall Street logged weekly gains but ended with solid losses on Friday. Still, the S&P 500 managed to record its best weekly performance in more than two months after the US Federal Reserve held interest rates steady on Wednesday.

With around six weeks to go before the Nov. 8 US presidential election, Reuters/Ipsos polling shows about 20 per cent of the electorate remains undecided, far higher at this stage in the campaign than the 12 per cent undecided four years ago.

Monday evening's debate between Donald Trump and Hillary Clinton is the first of three debates ahead of the election. It could set US television audience records and will also be watched around the globe.

"There won't likely be any outcome affecting the Japanese market directly, but investors are watching how the currency markets will move. Anything triggering fears for a strong yen trend is negative to stocks," said Takuya Takahashi, a strategist at Daiwa Securities.

Clinton will press Trump to provide more specifics on his policies, two top Clinton campaign aides said. Asian investors in particular will be looking for more comments from both candidates on their critical positions on free trade deals.

"Clinton will be trying to win over Republicans who are disaffected with Trump but yet don't trust her, while Trump will be trying to win over those independents who aren't sure whether he's Presidential material," Marshall Gittler, head of investment research at FXPrimus, said in a note.

The dollar edged down 0.1 per cent to 100.92 yen, moving back toward a one-month low of 100.100 touched last week.

"People are worried about the uncertainty about the election, so for a while, the yen stay around its current level, between 100 and 101 yen, that area," Harumi Taguchi, principal economist at IHS Markit in Tokyo.

The euro inched up slightly to $1.1231.

Underpinning the greenback, Boston Fed President Eric Rosengren said on Friday that he believed US short-term interest rates should be raised now and warned a decline in the jobless rate below its long-run sustainable level could derail economic recovery.

Japanese government bonds were quiet, with the superlong zone modestly weakening.

Investors will also pay more than the usual attention to JGBs this week, after the Bank of Japan announced last week that it is shifting its monetary policy framework to yield curve control, with the aim of pushing down short-to medium-term borrowing costs while allowing for a natural rise in super-long yields.

US crude futures added 0.7 per cent to $44.81 a barrel, after tumbling 4 per cent on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of this week's meeting of the Organisation of the Petroleum Exporting Countries (OPEC).

For the week, U.S. crude still managed to gain 3 per cent.

Brent crude rose 0.8 per cent to $46.27 a barrel, after shedding 3.7 per cent on Friday. For the week, it rose 0.3 per cent.