Trade stress, Iran tensions hits stocks

Expectations of dovishness from the US Federal Reserve and upcoming bilateral meetings at the G20 summit in Osaka have left Asian equities flat.

Asian stocks have been left adrift as expectations of dovish talk from the Federal Reserve pushed down Treasury yields and the dollar while lifting gold.

Equity investors are waiting on Tuesday to see if anything will come of China-US trade talks later this week.

US President Donald Trump is slated to meet one-on-one with at least eight world leaders at the G20 summit in Osaka, including China's President Xi Jinping and Russian President Vladimir Putin.

Early trade was very light, with MSCI's broadest index of Asia-Pacific shares outside Japan up a minor 0.09 per cent.

Japan's Nikkei was all but flat, as was the South Korean market.

E-Mini futures for the S&P 500 edged up 0.08 per cent after a lacklustre session on Wall Street. The Dow ended Monday up 0.03 per cent, while the S&P 500 lost 0.17 per cent and the Nasdaq 0.32 per cent.

There are at least five Fed policymakers speaking on Tuesday, including Chair Jerome Powell, and markets assume they'll stick with recent dovishness.

Elsewhere, yields on 10-year Treasuries have dived 120 basis points since November and, at 2.01 per cent, are almost back to where they were before Trump was elected in late 2016.

The speed and scale of the latest decline has seen the dollar fall for four sessions on a row against a basket of other currencies to stand at a three-month low of 95.980.

"USD DXY is now looking it likely will break through the March low of 95.76 and below there 95.0," said Tapas Strickland, a markets strategist at NAB.

"The drivers here continue to be heightened expectations of the Fed cutting rates - now 3.1 cuts priced by years' end - while data surprise indexes show the US data flow is now disappointing more than for Europe."

The euro has climbed to its highest in three months and was last holding firm at $US1.1403, within striking distance of the March top of $US1.1448.

Against the safe-haven yen, the dollar has hit its lowest since the January flash crash and was last at 107.33 yen.

The pullback in the dollar combined with lower yields globally has put a fire under gold, which touched a six-year top overnight. The metal is up 12 per cent since early May at $US1,426.39 ($A2,047.90) an ounce.

Oil prices consolidated after rising sharply last week in reaction to tensions between the United States and Iran.

Brent crude futures firmed eight cents to $US64.94 ($A93.24), while US crude was unchanged at $US57.90 ($A83.13) a barrel.

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