• Souring risk appetite in the Asia session is seeing equities knock back as traders favor safer assets.
• Oil, Treasury yields leading the pack further down.

Asia stocks are falling back in Tuesday trading as risk appetite withdraws and investors seek safer hills, with risk flows propping up the Japanese Yen and sending equities further down as Treasuries find themselves better bid.

European risk appetite is being held hostage by the political strife in Italy, with the failed Italian government formation becoming a bellwether of public support for the multi-nation currency; while knock-on effects of the political turmoil in Europe will have little to no effect in the Asia markets, traders are watching oil prices and US Treasury yields for signs of improving sentiment. With both metrics on the slide recently, traders are balking at the prospect of bidding higher and Asia equity indexes are in a bit of a slump.

Australia's ASK index is showing some signs of life, up 0.17% on the day as of writing, while the Shanghai Composite and Hong Kong's Hang Send Index are both off of their opening prices by about -0.60%, with the Japanese Nikkei index falling back over 0.85%.

Nikkei 225 levels to watch

The Nikkei 225 failed to continue a hopeful correction into the 23,000.00 major level after getting rejected from the 22,500.00 key barrier, and the index is set to continue last week's decline, which puts Japan's major index on the downside. Traders could soon be seeing a replay of the bearish action that took the Nikkei into a low of 20,318.00 in late March. Risk aversion is sapping further bullishness, and the 23,000.00 major handle, which constrained prices last December, looks set to hold for now, and a bearish continuation from here to could easily fall to 21,500.00 and hit the 50.0 Fibo retracement level, assuming support from the 200-day SMA at 21,700.00 fails to hold.