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Europe: Stocks follow Asia lower as oil retreats; yen advances
[LONDON] European stocks followed a slide in Asia as oil extended this week's slump. Malaysia's ringgit weakened, while the yen gained.
A gauge of stocks in Europe slid after material and energy companies led Asia's benchmark equity index lower and US oil dropped as much as 2.6 per cent. Malaysia's ringgit led a retreat in high-yielding currencies. Standard & Poor's 500 Index futures slipped, while Treasuries advanced. Senator Ted Cruz won the Iowa Republican caucuses in an upset over billionaire Donald Trump, while Democrat Hillary Clinton was clinging to the narrowest edge over Senator Bernie Sanders of Vermont.
Oil has erased last week's rally as speculation US stockpiles are continuing to expand reinforces concern over the global glut. The link between equity markets and crude had eased briefly as Federal Reserve Vice Chairman Stanley Fischer said the impact on the U.S. of recent market turbulence could factor into decision-making. The comments came in the wake of signals from central banks in Europe and Japan that they are ready to do what is needed to spur growth and after factory data underscored anxiety over China's economy.
"It's still a volatile market," said Rafael Palma Gil, a Manila-based trader at Rizal Commercial Banking Corp., which oversees about US$1.8 billion in assets. "While central banks have become relatively more accommodating, this stance doesn't remove the concern of a global economic slowdown, with the weakness in China." BP Plc reported a 91 per cent decline in fourth-quarter earnings after average crude oil prices dropped to the lowest in more than a decade. UBS Group AG said net income rose 11 per cent in the fourth quarter boosted by a tax gain that offset a decline in wealth-management and investment-banking profit.
The Stoxx Europe 600 Index was down 0.3 per cent at 8:01 a.m. London time. The MSCI Asia Pacific Index lost 0.7 per cent with groups of mining stocks and oil and gas producers sliding at least 2 per cent. S&P 500 Index futures dropped 0.4 per cent after the underlying gauge ended little changed on Monday in the U.S.
In Japan - where shares climbed almost 5 per cent over the past two days after the Bank of Japan surprised markets by introducing negative rates - the Topix index fell 0.7 per cent. The Kospi index in Seoul declined 1 per cent.
Australia's S&P/ASX 200 Index lost 1 per cent, while in Wellington, the S&P/NZX 50 Index advanced 0.1 per cent. The Shanghai Composite Index jumped 2.3 per cent as the central bank injected cash into the financial system before markets close for holidays next week.
West Texas Intermediate oil lost as much as 82 cents in New York to $30.80 a barrel after slumping 6 per cent Monday, erasing last week's gain. US inventoriesprobably rose by 3.75 million barrels through Jan. 29, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
Gold slipped 0.2 per cent while platinum and palladium both fell 0.8 per cent. The Bloomberg Commodity Index lost 0.1 per cent, sliding a second day.
Malaysia's ringgit dropped 1.1 per cent against the US dollar. Bank accounts related to possible money laundering associated with state-investment company 1Malaysia Development Bhd. were seized by authorities in Singapore and the Swiss Attorney General announced it's pursuing an investigation into alleged diversion of funds.
The Australian dollar fell 0.5 per cent after the central bank decision. The Korean won lost 0.6 per cent and the Japanese yen gained a second day, climbing 0.4 per cent.
Yields on US 10-year Treasuries lost two basis points, or 0.02 percentage points, to 1.93 per cent.