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Wellington - European equity-index futures signaled a return to the selloff that drove stocks to a two-year low this week. Hong Kong shares slumped with oil as investors shunned risk, while the yen and gold gained.
Futures on the Stoxx Euro Stoxx 50 Index slid 1.5% and Standard & Poor’s 500 Index contracts dropped.
The Hang Seng Index headed for its worst start to a lunar new year since 1994 as trading resumed after a three-day break. The yen climbed for a fourth day as a Bloomberg gauge of dollar strength traded near its lowest level since November. Gold rose beyond $1 200 an ounce, while US oil traded at $27 a barrel.
Signals by central banks from Europe to Japan that additional stimulus is at the ready is failing to ease investor concern over the creditworthiness of European banks and the continued selloff in crude oil. Societe Generale SA, France’s second-largest bank by market value, posted fourth-quarter profit that missed analysts’ estimates.
Federal Reserve Chair Janet Yellen suggested that the central bank might delay, but not abandon, planned interest-rate increases in response to recent turmoil in financial markets.
"Financial markets are repricing for a global growth slowdown," said Tim Condon, head of Asian research at ING Groep NV in Singapore. "Expectations that monetary policy would be able to do much have diminished considerably.”
Stocks
The MSCI Asia Pacific excluding Japan index was down 1.3% as of 7:13 a.m. in London. The Hang Seng gauge declined 4% and Korea’s Kospi lost 3%. Markets in Japan, China and Taiwan were closed for trading.
The Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in Hong Kong, slid 5.1%, the most since August. Australia’s S&P/ASX 200 Indexadded 1 percent, rising for the first time in five days.
Standard & Poor’s 500 Index futures dropped 0.5% with contracts on the Dow Jones Industrial Average, which shed 0.6% last session amid losses for Walt Disney Co. and International Business Machines.
The S&P 500 initially climbed on Yellen’s comments, before reversing that advance to end on Wednesday down less than 0.1%, a second straight day of closing basically little changed.
The Fed Chair also highlighted uncertainty over the pace of China’s growth and the related rout in commodities in her testimony, concerns that have roiled financial markets throughout the year and twice pushed global shares to the brink of a bear market.
Currencies
The yen climbed a fourth day, adding 0.7% to 112.59 per dollar, strengthening to a level that left it about 3% shy of where it traded before the Bank of Japan drove it lower in October 2014 by expanding stimulus. The Bloomberg Dollar Spot Index, a measure of the greenback’s strength against 10 major peers, was little changed after falling 0.9% in the past three days.
The yen pared gains of 0.9% after Masatsugu Asakawa, vice minister for international affairs at Japan’s finance ministry, said he is watching currency markets to see if moves are speculative. HSBC Holdings earlier warned there’s a growing risk the BOJ steps in to sell yen or cut interest rates, while Morgan Stanley sees authorities limiting themselves to warning investors against pushing the exchange rate too far.
“Markets appear to be testing the resolve of the BOJ and questioning the ability of monetary policy action to create a weakening Japanese yen,” said Sam Tuck, a senior currency strategist at ANZ in Auckland.
“Nobody really wants their currency bouncing around too rapidly. That in itself, irrespective of the level, does suggest that there could be some smoothing action just to slow it down.”
Commodities
Crude dropped 1.1% in New York to $27.18 a barrel. Inventories at Cushing, Oklahoma, the biggest US oil-storage hub rose by 523 000 barrels to 64.7 million, according to data from the Energy Information Administration. The site has a working capacity of 73 million barrels. Russia’s largest producer Rosneft OJSC said it will defend traditional markets and expressed doubts over any coordinated action to reduce output.
Gold rose 1% to $1 208.97 an ounce, poised for its highest close since May 20. Copper added 0.4%, while aluminum gained 0.8%.
