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Manila - Asian stocks and US index futures fell as oil extended this week’s slump. Malaysia’s ringgit weakened, while the yen gained.
Material and energy companies were the biggest decliners on Asia’s benchmark equity gauge as US oil dropped as much as 2.6%.
Malaysia’s ringgit led a retreat in high-yielding currencies. Standard & Poor’s 500 Index futures slipped, while Treasuries advanced. Senator Ted Cruz won the Iowa Republican caucuses in an upset over billionaire Donald Trump, while Democrat Hillary Clinton was clinging to the narrowest edge over Senator Bernie Sanders of Vermont.
Oil has erased last week’s rally as speculation US stockpiles are continuing to expand reinforces concern over the global glut and overshadows the prospect of an OPEC-Russia deal on cutting output.
The link between equity markets and crude had eased briefly as Federal Reserve vice chairperson Stanley Fischer said the impact on the US of recent market turbulence could factor into decision-making. The comments came in the wake of signals from central banks in Europe and Japan that they are ready to do what is needed to spur growth and after factory data underscored anxiety over China’s economy.
“It’s still a volatile market,” said Rafael Palma Gil, a Manila-based trader at Rizal Commercial Banking Corp., which oversees about $1.8bn in assets. “While central banks have become relatively more accommodating, this stance doesn’t remove the concern of a global economic slowdown, with the weakness in China.”
India joined Australia in keeping benchmark rates unchanged on Tuesday, and the Bank of Korea will issue minutes of its last meeting. South Korean consumer prices were flat in January from the previous month, after economists projected a 0.4% increase, data showed.
Stocks
The MSCI Asia Pacific Index fell 0.7 as of 08:07, with groups of mining stocks and oil and gas producers sliding at least 2.2%. Standard & Poor’s 500 Index futures dropped 0.6% after the underlying gauge ended little changed on Monday in the US.
In Japan - where shares climbed almost 5% over the past two days after the Bank of Japan surprised markets by introducing negative rates - the Topix index fell 0.6% and the Nikkei 225 lost 0.7%. The Kospi index in Seoul declined 1%.
Australia’s S&P/ASX 200 Index lost 1%, while in Wellington, the S&P/NZX 50 Index advanced 0.1%. The Shanghai Composite Index jumped 2.1% as the central bank injected cash into the financial system before markets close for holidays next week.
Commodities
West Texas Intermediate oil lost as much as 82 cents in New York to $30.80 a barrel after slumping 6% on Monday, erasing last week’s gain. US inventoriesprobably rose by 3.75 million barrels through January 29, according to a Bloomberg survey before an Energy Information Administration (EIA) report on Wednesday.
Gold slipped 0.3% while platinum and palladium both fell 0.9%. The Bloomberg Commodity Index fell 0.3%, dropping a second day.
Currencies, bonds
Malaysia’s ringgit dropped 1.1% against the US dollar. Bank accounts related to possible money laundering associated with state-investment company 1Malaysia Development Bhd. were seized by authorities in Singapore and the Swiss Attorney General announced it’s pursuing an investigation into alleged diversion of funds.
The Australian dollar fell 0.7% after its central bank left interest rates unchanged. The Korean won lost 0.6% and the Japanese yen gained a second day, climbing 0.4%.
Yields on US Treasuries lost two basis points to 1.93%. New Zealand ’s 10-year debt yield rose one basis point to 3.18%, halting a five-day slide. Yields on similar-maturity Japanese notes added 1 basis point to 0.08% after plunging the past two sessions.
