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Wednesday, October 16th, 2019

Asia stocks slide after Wall Street losses, oil drops on glut concerns

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by October 26, 2016 General

By Nichola Saminather

SINGAPORE (Reuters) – Asian shares tumbled in early trade on Wednesday, following in the footsteps of Wall Street, which pulled back on disappointing earnings, while the dollar inched down from a seven-month high and oil prices slid.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> slipped 0.3 percent.

Japan’s Nikkei <.N225> lost 0.2 percent, while South Korea’s KOSPI <.KS11> dropped 0.8 percent and Australia <.AXJO> fell 1.4 percent.

U.S. stocks ended Tuesday down between 0.3 and 0.5 percent, as results and forecasts from companies in sectors including housing and consumer products missed expectations.

Apple <.AAPL> too dragged the market lower, as iPhone sales, which were better than expected, nevertheless continued a declining trend. The company also forecast slimmer-than-expected profit margins over the coming holiday season, even as it projected record sales.

The U.S. declines followed a mixed performance in Europe, with British shares <.FTSE> closing up 0.45 percent, Germany <.GDAXI> flat after hitting its highest level this year, and France <.FCHI> down 0.3 percent. The broader European STOXX 600 <.STOXX> fell 0.3 percent.

“We had a rally (on Monday) and haven’t been able to sustain it, due to weaker-than-expected numbers from some names,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. He called the day’s earnings report a “mixed bag” for stocks.

The dollar index <.DXY> , which tracks the greenback against a basket of six global peers, was steady at 98.726 early on Wednesday.

It hit its highest level since Jan. 2 on Tuesday as traders saw a more than 78 percent chance of an interest rise hike by the Federal Reserve in December, according to CME Group’s FedWatch data.

The dollar slipped 0.1 percent to 104.1 yen after touching the highest level in almost three months on Tuesday.

Sterling retreated 0.1 to $1.2180 on Wednesday.

On Tuesday, it slumped to as low as $1.2082, its weakest in 2 1/2 weeks after Bank of England (BoE) Governor Mark Carney said there were limits to the central bank’s ability to ignore the effect of the currency’s slide on inflation. His comments, ahead of a policy meeting next week, doused expectations for more monetary stimulus in Europe.

The euro, which slid to a 7 1/2-month low of $1.0851 on Tuesday, recovered to end the session flat, and was trading little changed at $1.0887 early on Wednesday.

The stronger dollar and a report that showed U.S. inventories grew nearly three times as much as forecast weighed on oil prices.

U.S. crude fell 1.4 percent to $49.29 on Wednesday. It is down 3.1 percent this week.

Brent futures retreated 1.1 percent to $50.25, bringing this week’s losses to 3 percent.

“Basically, the glut continues and demand is not coming back,” said Phil Davis, a trader at PSW Investments in Woodland Park, New Jersey. “I don’t want to read too much into it but the fact of the matter is it certainly doesn’t support $50 oil.”

(Reporting by Nichola Saminather; Additional reporting by Rodrigo Campos and Ethan Lou; Editing by Eric Meijer)

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