Asia: Stocks fall from one-year high as commodity shares decline

[SINGAPORE] Asian stocks outside Japan retreated from a one-year high, following US equities lower, after losses in crude oil clouded the prospects for global growth.

The MSCI Asia Pacific Excluding Japan Index fell 0.4 per cent to 446.44 as of 9:47 am in Hong Kong, poised to halt a five-day gain. Finance and commodity shares fell the most on the regional gauge. Markets in Tokyo are shut for a holiday.

Singapore stocks sank the most in a week as the island nation cut the top end of its 2016 growth forecast. Korean shares fell for the first time in six days and Taiwanese equities slid from the highest close since July 2015.

Thursday's drop comes after the Asian gauge climbed about 25 per cent from a February low, shrugging off the effects of Britain's vote to leave the European Union as central banks unleash further monetary easing. Oil's decline deepened in Asian trading as weekly government data showed US crude stockpiles unexpectedly expanded.

"The biggest risk to the market at the moment is a huge drop in oil prices," James Woods, a strategist at Rivkin Securities in Sydney, said by phone.

"Recent gains, particularly in US equities, are becoming exhausted. We'll see some near term weakness in the coming weeks. Investors are likely to be buying on these dips as central bank policies remain supportive of equities."

Rate Cut

New Zealand's central bank cut interest rates to a record low and flagged more easing to combat low inflation, disappointing some investors who were looking for a more aggressive signal. While policy makers around the world are engaged in unprecedented stimulus efforts, wagers on the Federal Reserve hiking borrowing costs this year linger below 50 per cent.

South Korea's Kospi Index retreated 0.4 per cent. The nation's central bank held its key interest rate at a record low as board members defer further policy action until they have a clearer picture of the economy's path.

Taiwan's Taiex index lost 0.3 per cent, Australia's S&P/ASX 200 Index dropped 0.9 per cent and New Zealand's S&P/NZX 50 Index fell 0.1 per cent.

Singapore's Straits Times Index sank 0.6 per cent, halting a two-day increase. Hong Kong's Hang Seng Index climbed 0.4 per cent. The Shanghai Composite Index added 0.6 per cent.

Investors are awaiting the release of Chinese data for July on industrial output, retail sales and fixed-asset investment due on Friday. Figures on money supply may be published as early as Thursday. Reports earlier this week showed that exports remained subdued while a decline in producer prices narrowed.

"China is still in the back of investors' minds," Rivkin's Mr Woods said.

"Although we've seen some encouraging data recently, I don't think we're out of the woods just yet."

Futures on the S&P 500 Index was little changed. The US equity benchmark index lost 0.3 per cent, retreating after the measure closed a point from an all-time high, as energy producers tumbled after crude oil slumped.

West Texas Intermediate crude futures slipped 0.6 per cent in Thursday trading, after declining 2.5 per cent on Wednesday.

BLOOMBERG