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Asian stock markets steadied on Tuesday and crude prices inched up from Monday’s three-week low, with investors uncertain whether output cuts by major exporters, led by Saudi Arabia and Russia, will be enough to support the oil market as other producers have increased supplies.
Sterling, however, languished near its lowest close in three months on renewed concerns about a “hard” Brexit.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.3 per cent after a tentative start.
Japan’s Nikkei erased earlier losses to trade little changed.
China producer prices
China’s CSI 300 was little changed, after China’s producer prices beat expectations to surge to a more than five-year high in December as raw materials prices soared in the face of a weaker yuan.
Consumer inflation also rose but missed forecasts.
The Shanghai Composite index slipped 0.2 per cent.
Hong Kong’s Hang Seng added 0.3 per cent.
Crude oil
Oil prices were marginally steadier on Tuesday after suffering a nearly 4 per cent fall on Monday, their biggest one-day loss in six weeks, amid fears that record Iraqi crude exports in December and rising US output, and increased supplies from Iran would undermine an agreement by exporters, led by Saudi Arabia and Russia, to curb production.
“It's unusual to have these agreements last for very long because inevitably someone cheats,” said Daniel Morris, senior investment strategist at BNP Paribas Investment Partners.
“It’s certainly conceivable that the agreement falls apart and you get more production than anticipated in addition to already thinking that it (the oil price) should be lower because of dollar strength.”
US crude crawled up 0.1 per cent to $52.04 a barrel, after slumping 3.8 per cent on Monday.
Global benchmark Brent added 0.15 per cent to $55.03, after dropping 3.8 per cent to $54.94 a barrel on Monday.
‘Hard Brexit’ fears
Sterling was marginally steadier on Tuesday after sharp drops on Monday and Friday dumped the currency at its lowest level since Oct. 11.
Standing at $1.217 on Tuesday, sterling was just 0.1 per cent firmer, a negligible improvement after Monday’s fall of 1.0 per cent and Friday’s 1.1 per cent drop.
Prime Minister Theresa May’s comments on Sunday that Britain would not be keeping “bits” of European Union membership stoked fears of a “hard Brexit’’, as she said border controls would be prioritised over market access.
EU officials say Britain cannot have access to its single market of 500 million consumers without accepting the principle of free movement.
The US dollar was down 0.4 per cent at 115.585 yen on Tuesday, ahead of a news conference by US President-elect Donald Trump on Wednesday, his first since winning the November election.
The dollar index, which tracks the greenback against a basket of six global peers, slipped 0.3 per cent to 101.64, extending Monday’s 0.3 per cent loss.
The euro climbed 0.3 per cent to $1.06075 on Tuesday.
Quest for safety
Gold shone amid investors’ quest for safety.
Spot gold, which jumped to a more than one-month high on Monday, widened gains 0.3 per cent to $1,184.86 an ounce on Tuesday.
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