Asian stocks kicked off a brand new trading week on the back foot, as trading sentiment took a hit from concerns over Greece's torturous debt repayment talks and fresh tightening of margin financing in China.
After talks aimed at reaching a deal between Greece and its creditors collapsed over the weekend, comments by Yanis Varoufakis, the embattled Greek finance minister, emerged early Monday, in which he claimed it would be possible to reach an agreement "in one night" but German chancellor Angela Merkel "must take part."
According to Reuters, Varoufakis told German newspaper Bild that a 'Grexit' was not a sensible solution, adding that debt restructuring was "the only way possible for Greece" and that it would need no further aid if it was able to do so.
Rajiv Biswas, Asia Pacific chief economist at IHS Global Insight, said there would be turmoil in financial markets if Greece defaulted on its next debt repayment. "I think there are increasing signs that this may not work out and so the risks have increased that if Greece doesn't come to a deal by end June, it may be forced to default on its International Monetary Fund (IMF) payment and if that happens, it could create a lot of turbulence in global financial markets and raises question marks about what happens next," he said.
Investors were also cautious ahead of this week's Federal Open Market Committee (FOMC) meeting, which could shed some light on the timing of a widely-anticipated increase in interest rates.
U.S. shares handed over an unimpressive lead by finishing lower on Friday. The blue-chip Dow and the S&P 500 closed down 0.78 and 0.7 percent, respectively, while the tech-heavy Nasdaq settled 0.62 percent lower.