Oil slump hits Asian energy stocks, pound slides

Sydney - A slump in crude weighed on energy shares as most Asian equity markets headed for a lower finish to the week.

Declines in the Australian and New Zealand dollars deepened and the pound slid.

Stocks in Tokyo, Sydney and Singapore fell, with energy producers dropping the most. Oil extended losses after falling the most in three weeks as Opec stuck to the most predictable outcome in its plans to limit production.

Commodity currencies retreated, and the onshore yuan headed for its strongest weekly gain against the dollar in four months. The pound fell as a poll showed UK Prime Minister Theresa May losing ground to her challenger ahead of next month’s election.

Global equities are on course for the best week since April, trading at a record high after six weeks of gains, as investors bet global economic growth can withstand higher US interest rates as soon as next month.

Stocks have recovered from worries surrounding the prospects for President Donald Trump’s reform policies, which triggered the biggest slide on the S&P 500 in eight months last week.

Volume may be lower than normal in some markets as investors approach the long weekend in the US and the UK, both of which have holidays on Monday.

The British pound dropped after a poll showed the Conservative party lead narrowed after the Manchester attack, and as investors in Asia sold the currency after UK’s first-quarter economic growth missed estimates.

The poll results come with the June 8 general election less than two weeks away.

In China, the yuan has been strengthening amid speculation that officials had intervened to pull the spot rate closer to their daily fixing. China plans to change the way it calculates the yuan’s daily reference rate against the dollar, adding a "counter-cyclical adjustment factor" that may blunt the impact of big market swings, according to people familiar with the matter.
Here are some upcoming events to watch out for:

First-quarter US GDP was probably better than the dismal 0.7% rate first estimated; data will show Friday, though analysts are already tamping down expectations for the second quarter.

On Friday from 4pm Hong Kong time, Bloomberg Intelligence Chief Asia Economist Tom Orlik will be answering your questions about China and in particular the Moody’s downgrade in a TOPLive Q&A.

Follow the blog at TLIV and do at any time - either before the blog starts or while it’s under way - send in any questions you may have.

Here are the main moves in markets:

Currencies

The Bloomberg Dollar Spot Index climbed less than 0.1% as of 12:47 in Tokyo, adding to a 0.2% increase on Thursday.  The pound slid 0.4% to $1.2888. A YouGov poll for the Times late on Thursday put the Conservatives at 43% with Labour at 38% - a dramatic narrowing of the gap that even this month has been as high as 24 points in some polls.

The onshore yuan gained 0.2%, taking its weekly advance to 0.4%, the most since January.

The Aussie dropped 0.4%, after losing 0.7% on Thursday. Currencies of countries heavily reliant on commodities as an export all suffered in the wake of the slide in raw materials.

The yen rose 0.3% to 111.57 per dollar, after dropping 0.3% on Thursday. Data on Friday showed Japan’s core consumer prices rose for a fourth month in April, the longest run of gains since mid-2015.

Stocks

Futures on the S&P 500 fell 0.1%. The underlying gauge rose 0.4% on Friday as Best Buy and PVH results topped estimates and the Bloomberg Consumer Comfort Index signalled optimism among US shoppers. Japan’s Topix slipped 0.4%, trimming its weekly advance to 0.8%.
 
Australia’s S&P/ASX 200 Index fell 0.7%, with BHP Billiton dropping 2.3%. South Korea’s Kospi rose 0.4%, poised for another record close.  Hong Kong’s Hang Seng Index rose less than 0.1%, bringing its weekly gain to 1.9%, while the Shanghai Composite increased 0.1%.  

Commodities

West Texas Intermediate crude retreated 1% to $48.42, after sinking 4.8% in the previous session. Gold rose 0.1% to $1 257.39 an ounce.

Bonds

The yield on 10-year Treasury notes fell one basis point to 2.25%. US bonds are on course for a fourth month of gains. Yields on 10-year Australian government bonds fell four basis points to 2.41%.