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Wellington - Asian stocks fell, ending their best week this year on a down note, as resumption in losses for oil buoyed haven assets such as the yen. South Korea’s won pared its drop after policymakers signaled a readiness to bolster the currency.
Energy shares led declines across the region as US crude extended its slide below $31 a barrel on data reinforcing the supply glut. Japan’s Topix index trimmed its weekly advance to 7.4% as the local currency rose to the strongest level in a week.
The won touched a 5 1/2-year low against the greenback before paring its fall as the central bank and finance ministry said recent moves have been excessive and they would take measures to combat “herd behaviour" in the foreign-exchange market. Asian bond risk rose for the first time in more than a week.
“This week is the first sign of change I have seen in 2016,” Evan Lucas, a markets strategist in Melbourne at IG, said in an e-mail to clients. “However, there are a few things I am yet to see to make this move a longer term one,” he said, citing the absence of “patient capital” in markets and the potential for even more policy easing from central banks.
While turbulence in financial markets has abated this week, investors are still alert for news on China’s economic outlook and the global glut in crude. The Federal Reserve acknowledging the potential impact of the turmoil on its interest-rate outlook spurred a weakening of correlations between US equities and 10 other asset classes, including oil.
Japan reports on store sales Friday, while Thailand updates foreign-currency reserves and the Philippines issues data on remittances. Indian markets are closed for a holiday.
Stocks
The MSCI Asia Pacific Index fell 1% as of 12:28 p.m. Hong Kong time, leaving its advance in the week at 5.4%, the best performance since October. Earlier today, the measure was on course for its steepest such gain since 2011. The Topix lost 2%.
“The stronger yen will be a burden on Japanese markets,” Hideyuki Ishiguro, a senior strategist at Okasan Securities in Tokyo, said by phone. “Investors are concerned at the downside of earnings, especially for exporters, which may weigh down the markets. We’re not in a place where we can buy. The yen may strengthen further versus the dollar.”
Australia’s S&P/ASX 200 Index dropped 1%, with energy producers down 3.3%. Hong Kong’s Hang Seng Index slipped 0.5% as casino operators weighed on the gauge after MGM Resorts International posted a surprise fourth-quarter loss.
MGM China Holdings, the company’s Hong Kong-listed unit, sank 7.7%, while Sands China fell 2.9% to lead losses on the Hang Seng measure.
Futures on the Standard & Poor’s 500 Index slipped 0.1% following a 0.5% retreat in the gauge last session, its first decline in four days.
Currencies
The yen strengthened 0.4% to 112.83 per dollar, heading for a third weekly gain. The currency has climbed more than 5% since the Bank of Japan surprised traders by shifting to negative interest rates, while the Topix is down 8%.
The won traded at 1 233.92 per dollar. It touched 1 239.59, the weakest since mid-2010, before the finance ministry and Bank of Korea issued their joint statement on currency. Recent exchange-rate movements and volatility has been excessive, they said.
The Malaysian ringgit slipped 1.3% amid oil’s retreat. The Australian dollar fell versus all 16 major peers after the Wall Street Journal reported that central bank board member John Edwards said the currency is too strong.
China’s yuan headed for the biggest weekly advance in a year as trading resumed after the Lunar New Year break. The currency rose 0.84% from February 5 and fell 0.05% on Friday to 6.5204 a dollar, according to China Foreign Exchange Trade System prices.
The offshore yuan in Hong Kong fell 0.3% this week to 6.5280 a dollar. The Chinese currency’s interbank borrowing rates in the city climbed across all tenors on Friday, with the overnight surging 481 basis points to 9.27%.
Commodities
West Texas Intermediate crude slipped 0.9% to $30.50 a barrel after rising the past two days. Brent fell 1% to $33.94.
US crude stockpiles rose by 2.15 million barrels to 504.1 million last week, according to the Energy Information Administration. That’s the highest level in EIA data going back to 1930. In another sign of the glut, supplies at Cushing, Oklahoma, the biggest US oil-storage hub, rose to a record 64.7 million barrels.
The site, which is the delivery point for WTI, has a working capacity of 73 million, according to the EIA.
Oil prices climbed earlier this week as Iran cautiously supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels.
Gold slipped 0.3% to $1 227.04 an ounce after posting a two-day, 2.5% jump.
Bonds
Japan’s benchmark 10-year bond yield fell to minus 0.005%, dropping below zero for the first time in a week, after Treasuries rallied on Thursday.
Indonesia’s two-year sovereign bonds headed for a seventh weekly advance, the longest run of gains since 2006, on speculation the central bank isn’t done cutting interest rates just yet. Bank Indonesia lowered its policy rate for the second time this year on Thursday.
The Markit iTraxx Asia index of credit-default swaps increased 2 basis points to 162 basis points, according to prices from Westpac Banking On the week, the measure is still poised to fall 15 basis points in its biggest weekly decline in more than four months, according to data provider CMA.
