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Wellington - China’s stocks fell as concern slumping commodity prices and a weakening economy will reduce profits overshadowed the biggest cash injection into financial markets in three years. Oil led a retreat in raw materials, while South Korea’s won weakened.
The Shanghai Composite Index fell 2.9%. Japanese shares retreated as the nation’s central bank started a two-day meeting. Facebook’s after-market bounce spurred gains in futures on the Nasdaq 100 Index. US crude snapped a two-day advance as American stockpiles data reinforced concern a global glut is worsening.
China’s central bank used this week’s two money-market operations to add the most funds to the financial system in three years.
Malaysia’s ringgit rose to a seven-week high after Prime Minister Najib Razak maintained his fiscal- deficit target.
With 2016 proving to be one of the most volatile starts to a year on record for financial markets, the Fed’s first statement since its December interest-rate hike noted officials were “closely monitoring” developments from China to Europe, for any adverse impact on the US economy.
China’s policy makers injected more cash into its financial system to keep borrowing costs from rising as they contend with the slowest economic growth in a quarter century and record capital outflows that drove the yuan to a five-year low this month.
“The Fed is acknowledging reality - that the outlook has become more uncertain - and is signalling that there may be fewer rate hikes,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors, which oversees about $120bn.“It seems central bankers around the world are starting to respond, which ultimately should be positive for share markets.”
Stocks
The MSCI Asia Pacific Index dropped 0.2% as of 7:19 a.m. in London after falling as much as 0.6 percent and advancing as much as 0.3%. Japan’s Topix retreated 0.6%. Etsuro Honda, an economic adviser for Prime Minister Shinzo Abe, said the nation’s central bank needs to boost its unprecedented stimulus.
The Bank of Japan is expected to leave policy unchanged at the conclusion of its meeting on Friday, even amid weak inflation and rising concern over gyrations in global markets.
Thirty-six of 42 economists surveyed by Bloomberg predict the board to hold fire this week, yet 29 are predicting more easing in the foreseeable future. The European Central Bank sparked an equity rally last week when President Mario Draghi signalled further stimulus may be as soon as March.
The Kospi index in Seoul advanced 0.5% after dropping as much as 1.1%. Samsung Electronics fell 2.6% after posting fourth-quarter profit that missed analysts’ estimates. Australia’s S&P/ASX 200 Index climbed 0.6%.
Hong Kong’s Hang Seng Index dropped 0.1% and the Hang Seng China Enterprises Index fell 0.2%.
The People’s Bank of China said it auctioned 340bn yuan ($51.7bn) of reverse-repurchase agreements on Thursday, after offering 440bn yuan two days earlier. Policy makers are helping to prevent a cash crunch before the week-long Lunar New Year holiday.
Futures on the Standard & Poor’s 500 Index rose 0.3% after US stocks sank on Wednesday amid an Apple-led slump in technology shares. The Nasdaq futures added 0.7% after Facebook’s 12% surge in extended New York trading. Should the social-media company’s after-market price action be replicated in Thursday trading, shares may erase this year’s drop.
Commodities
West Texas Intermediate crude retreated 1.4%, paring Wednesday’s 2.7% gain. US crude inventories increased by 8.38 million barrels last week, the biggest increase in volume since April, according to a weekly report from the Energy Information Administration.
Gold slipped 0.6% to $1 118.29 an ounce, snapping three days of gains.
Metals retreated, with aluminum declining 0.7% after a 2.1% increase yesterday. It’s still trading higher than its price at the start of the year. Zinc tumbled 1.7% and copper fell 1.1%.
Currencies
The euro dropped 0.2% to $1.0874. The shared currency is still poised for its first back-to-back monthly advance since 2013 as demand for the currency as a haven outweighed the potential for further European Central Bank stimulus. The yen was little changed at 118.70 per dollar.
The won fell to a one-week low as global funds pulled more money from South Korean stocks after Samsung’s earnings. The currency retreated 0.5% to 1 208.55 per dollar, and reached 1 211.20, the lowest since January 21.
Malaysia’s ringgit climbed for a fifth day, its longest winning streak since September, and was the biggest gainer among 20 developing-nation exchange rates tracked by Bloomberg. The currency strengthened 0.8% to 4.2170 per dollar.
Bonds
Treasuries were little changed as analysts sought to digest the Fed’s statement. The yield on the benchmark 10-year note was at 2.01%, having fallen to 1.94% on January 20, the lowest since October.
Japanese 10-year bonds fell for the first time this week, pushing the yield up one basis point to 0.225%, compared with the record low of 0.19% reached January 14.
