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Asian shares on Wednesday followed in the footsteps of Wall Street, which pulled back overnight on disappointing earnings, while the dollar inched down from a seven-month high and oil prices extended this week’s losses.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.6 per cent.
Japan’s Nikkei slipped 0.2 per cent, while South Korea’s Kospi dropped 1.3 per cent and Australia fell 1.6 per cent.
China’s Shanghai Composite index pulled back 0.2 per cent, while Hong Kong’s Hang Seng lost 0.6 per cent.
The declines are “mainly due to the soft lead from Wall Street’’, said Shane Oliver, head of investment strategy at AMP Capital in Sydney.
“Investors remain nervous given the US election, (Federal Reserve) meetings, China property market etc.”
US stocks
US stocks ended Tuesday down between 0.3 per cent and 0.5 per cent, as results and forecasts from companies in sectors, including housing and consumer products, missed expectations.
Apple Inc. 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 US declines followed a mixed performance in Europe, with British shares closing up 0.45 per cent, Germany flat after hitting its highest level this year, and France down 0.3 per cent. The broader European STOXX 600 fell 0.3 per cent.
US GDP data
With investors looking ahead to US third-quarter gross domestic product data on Friday, the dollar index, which tracks the greenback against a basket of six global peers, was steady at 98.748.
It hit its highest level since February 1 on Tuesday as traders saw a more than 78 per cent chance of an interest rise hike by the Federal Reserve in December, according to CME Group’s FedWatch data.
The dollar edged up 0.1 per cent to 104.295 yen after touching the highest level in almost three months on Tuesday.
Sterling retreated 0.2 per cent to $1.2164 on Wednesday.
BoE Governor’s speech
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, stifled 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 $1.0889 on Wednesday.
The Australian dollar jumped 0.6 per cent to $0.7689 to post its biggest increase in a week after inflation ran slightly faster than expected, boosting bets the central bank will hold policy steady into next year.
The stronger dollar and a report that showed US inventories grew nearly three times as much as forecast weighed on oil prices.
Crude oil
US crude fell 1.4 per cent to $49.30 on Wednesday. It is down 3.1 per cent this week.
Brent futures retreated 1.1 per cent to $50.21, bringing this week’s losses to 3 per cent.
“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.”
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